Distilleries Company of Sri Lanka PLC (DIST) is the 6th largest listed company in the CSE in terms of market capitalization, just ahead of HNB. Although the company started as a distilleries business it has grown to be a diversified company with interests in several other industries. Due to word “Distilleries” in the company name it has not been able to market the brand name DCSL till now and had created “Melstacorp”. Subsequent investments were made with the brand name of “Melsta” which is a fully owned subsidiary of DIST. Now the company intends to swap this ownership structure by making Melstacorp the ultimate parent and DIST a subsidiary. This required shareholder approval and court permission, both of which are now been granted.
Under the arrangement, 1.2b shares of Melstacorp will be allotted to DIST shareholders at a ratio of 4 MELSTA shares for every DIST share held. Thereafter Melstacorp will be listed in CSE. In order to keep DIST listed 20% new shares of DIST will be issued to keep the minimum holding.
This exercise if done right will unlock value for few companies in the group. Independent assessment of Melstacorp and the arrangement overall is provided in the CSE website.
DIST
DIST is currently at 12.0x P/E on TTM basis and 1.2x P/B and generates 10.3% ROE. Although it is categorized under the BFT sector, it has interests in other sectors too.
Milford Exports owns 41.5% of DIST while Lanka Milk Foods (LMF) owns 12.7%. LMF is a listed company in which Melstacorp has a large stake.
