Kazakhmys approves US$4.7 billion bid for ENRC

A key shareholder in Eurasian Natural Resources Corporation plc (ENRC) said it would accept a proposed £3.04 billion (US$4.7 billion) buyout, even though ENRC’s independent directors rejected it.

The offer, unchanged in structure from an initial proposal that ENRC’s three founders and the Kazakh government tabled in May, was made in cash and shares. It valued Lonon-listed ENRC at roughly £2.34/share.

Kazakhmys, which holds 26% of ENRC, said it would accept the terms. 

As long as Kazakhmys shareholders vote to approve the offer, the bidding consortium will break through the 75% threshold it needs to secure control. The consortium already owns 53.9% of the company.

But ENRC, a Kazakh-based producer of ferro-alloys, said it cannot recommend the offer at the current level.

The chairman of the independent committee, Dr Mohsen Khalil, said: "[We are] very disappointed by the value of the Offer, which it [the committee] believes materially undervalues ENRC, its fundamentals, the intrinsic value of its underlying assets and its growth prospects.”

But a statement from Kazakhmys said: “The offer may undervalue ENRC and its assets but after seeking to engage with the…consortium and its constituent members, has concluded that there is no prospect of obtaining improved terms.”

It added that it had a number of concerns about on-going investment in ENRC should the offer not proceed.

“These include corporate governance concerns and the ongoing Serious Fraud Office investigation into certain allegations involving ENRC.” 

When details of the initial proposal were revealed last month ENRC said the bid “materially undervalues ENRC”. 

Kazakhmys shares were trading around £2.19/share in early morning trading in London