This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: ENRC Directors Slam Founders' Offer

NEW YORK ( The Deal) -- Eurasian Natural Resources Corp. (ENRC) warned minority shareholders they are being short-changed by a cash-and-share bid of about £3.1 billion ($4.8 billion) from the group's founders but said that investors may still have to accept the bid or risk being stranded in an unlisted and illiquid company.

Independent board members charged with assessing the bid for the London-listed mining company said Wednesday they could not recommend the offer of about 240.9 pence per share but admitted they were powerless to stop a bid that is backed by key shareholders with about 80% of the company.

"The independent committee believes that the offer materially undervalues ENRC and is, therefore, not capable of recommendation," the committee noted in a letter to shareholders. "However, given the risks and uncertainties [...] the independent committee has concluded that relevant ENRC shareholders should seriously consider the offer."

ENRC is the world's largest producer of chrome, Kazakhstan's largest iron ore producer and the world's No. 9 producer of alumina. On Wednesday, it posted EBITDA of $944 million for the first half of 2013 from sales of $3.21 billion, down 17% and 1% respectively, year-on-year.

A consortium of Kazakhstan's State Property and Privatization Committee and three ENRC founders, Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev, are offering $2.65 in cash and 0.23 of a share in another mining company, Kazakhmys, for each ENRC share. The consortium, which made its offer on June 24, owns 53.9% of ENRC.

Shareholders in Kazakhmys, which is also listed on the London exchange and is the largest single investor in ENRC, with a 26% stake, voted on Aug. 2 to accept the offer. That support means that the consortium has secured 79.9% of ENRC, breaching a 75% mark that gives it effective control of the company. It also means it has enough shares to pursue its goal of cancelling ENRC's London listing. ENRC's independent committee said that the delisting was almost inevitable. It had "explored the possibility of generating viable alternatives to the offer," but found no other options and noted that the consortium would have the power to block any such proposal.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CS $15.25 0.26%
LAZ $35.57 -1.33%
AAPL $93.64 -0.11%
FB $118.57 0.84%
GOOG $698.21 0.75%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs