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Miner ENRC rejects £3.0-bn bid by Kazakh consortium

25 june 2013, 23:44
0
Photo courtesy of vesti.kz
Photo courtesy of vesti.kz
Mining giant Eurasian Natural Resources Corp rejected on Monday a £3.04-billion ($4.67-billion) takeover offer from a consortium comprising the Kazakh government and the founders of ENRC, AFP reports.

Eurasian Resources Group, a newly-formed consortium, said in a statement that it had offered to buy ENRC after rival miner Kazakhmys agreed to sell its 26-percent stake.

The bid was worth the equivalent of 3.57 billion euros but ENRC, which operates in Asia, Africa and Latin America, said that this was not enough.

"The board of Eurasian Resources Group is pleased to announce the terms of an offer to be made by Eurasian Resources for the entire issued and to be issued share capital of Eurasian Natural Resources Corporation PLC," said a statement from the consortium.

"The offer values each ENRC share at approximately 234.3 pence and the fully diluted share capital of ENRC at approximately £3.043 billion."

However, ENRC -- one of Central Asia's largest miners which has operations in Kazakhstan, China, Russia, Brazil and Africa -- rejected the offer.

ENRC said in a statement that it "considers that the offer materially undervalues the company".

The group added that it "cannot recommend the offer to relevant ENRC shareholders at the current level".

The consortium -- which includes ENRC founders Alexander Machkevitch, Alijan Ibragimov, Patokh Chodiev, as well as the Kazakh government -- wants to de-list the company and boost its operational performance.

In a separate statement, Kazakhmys said the deal would give ENRC about $887 million in cash, and more than 77 million Kazakhmys shares. It added that this will "substantially strengthen the group's financial position".

The three ENRC co-founders and the Kazakh state already own almost 54 percent of ENRC, which has been quoted on the London stock market since 2007.

"The share price performance of ENRC over recent years has been disappointing and has materially lagged behind its diversified mining peer group," added the consortium statement.

"There have been several reasons for this," the statement said.

"Whilst the founders and the Kazakh government are confident of the underlying quality and overall potential of ENRC's key businesses, they believe that the value of ENRC will only be fully realised if ENRC is no longer a listed company."

This would allow "greater management focus on operational performance."

The consortium also said: "The Kazakh government has a particular interest in stabilising the operating and financial performance of ENRC given that ENRC employs approximately 66,700 people in Kazakhstan and is responsible for providing key infrastructure support in a number of areas."

In reaction to the takeover bid, ENRC shares gained 0.55 percent to 218.10 pence on London's FTSE 100 index of leading companies, which was 2.03 percent lower at 6,034.41 points.

Kazakhmys meanwhile saw its share price slump 8.05 percent to 247.70 pence on the British capital's second-tier FTSE 250 index, which was 2.59 percent down at 13,313.17 points.

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