Janata Jute Mills changes hand in Tk700cr deal

The Bangladeshi private sector has witnessed its biggest ever silent acquisition in the country during the Covid-19 pandemic.

Akij Group Managing Director Sk Bashir Uddin has bought Janata Jute Mills – one of the largest, oldest and most-profitable jute product makers in the country – for around Tk700 crore. The deal also includes Sadat Jute Mills, a second factory owned by Janata – that was established in 1985 in Cumilla – and a cold storage facility.

Both parties completed the deal and transfer of shares earlier this month after a series of virtual meetings.

"We want the mills to be run successfully as we have a strong reputation and renowned buyers across the globe," Mahmudul Huq, the erstwhile deputy managing director of Janata Jute Mills, said while explaining the thinking behind the decision to sell.

Najmul Huq, his older brother and managing director of Janata Jute Mills, could not give adequate time to the business due to his age – nearly 72 years. He has three daughters who live in the United States. Mahmudul's only daughter, who survived a car accident in Italy, is also studying in the US.

"There was nothing wrong with our mills. We were making profits and we had no bank loans," Mahmudul told The Business Standard on Saturday. He said their export value in 2019 was around $55 million (over Tk450 crore).

Despite the takeover by Bashir, Mahmudul will run the jute mills as chief executive officer for around a year as per the deal between both parties.

Acquisitions are very rare in Bangladesh. In most cases foreign companies buy either local or other foreign entities operating in the country.

The most recent, and biggest ever, acquisition also involved Akij Group when it sold its entire tobacco business to Japan Tobacco at a whopping $1.47 billion (equivalent to Tk12,400 crore) in November 2018. In April the same year, Alipay – an affiliate of Alibaba Group – bought 20 percent stakes in bKash.

A Chinese consortium, that includes the Shenzhen and Shanghai stock exchanges, bought 25 percent stakes in the Dhaka Stock Exchange for $125 million (around Tk1,000 crore) in 2018. In the same year, Beximco Pharmaceuticals Limited completed the acquisition of 85.22 percent of Nuvista Pharma Limited.

Before that, there had been four major acquisitions: the purchase of Aktel by Malaysia's Axiata, the acquisition of Warid Telecom by India's Airtel, the purchase of Sheba Telecom by Egypt's Orascom Telecom, and the purchase of Oriental Bank by ICB Financial Group – another Malaysia-based group.

There are some other cases that show foreign companies acquiring either local or foreign firms. However, there are hardly any examples of a local company acquiring another big local firm – except when Transcom Beverage bought Dhaka Beverage in the early '90s.

However, Bashir, who has been leading Akij Group since the demise of his visionary father Sk Akij Uddin in 2006, has shown courage to make such a big move despite already having the country's largest jute mills in operation.

Sources close to the deal said when his other brothers on the board of the group refused to buy another jute mill, Bashir stepped in to acquire Janata and Sadat mills, by himself, along with Zenin Cold Storage.

Despite repeated phone calls and text messages, Bashir has not responded for comment.

Bangladesh is the largest producer of jute in the world – after India. Producing one million tonnes of jute per year, on average, the country is also the largest exporter of raw jute in the world.

Bangladesh exported jute and jute goods worth $752 million during the first 11 months of the current fiscal year. Of the exports, over 60 percent came from jute yarn and twine, followed by raw jute, sacks and bags.

Bangladesh also exported jute carpets worth over $20 million from July to May this year, according to data by the Export Promotion Bureau.