INTERVIEW: “The weekend’s protests were the Russian peoples’, not the opposition’s” – Maxim Reznik
Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
Russia's NorNickel adopts blockchain for supply chain management
Russia goes ahead with eSIM technology
Russia's retailer X5 Group posts 13% sales growth in 4Q20
National Bank of Ukraine retains a key policy rate at 6%, the outlook of the CPI deteriorates
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
LONG READ: The oligarch problem
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
BALKAN BLOG: Superstition and resentment surround vaccination plans
Albania needs reforms for e-commerce to thrive, says World Bank
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
Kosovo’s biggest opposition party risks being unable to run in general election
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
Private finance mobilised by development banks up 9% to $175bn in 2019
OUTLOOK 2021 Romania
Slovenia’s economic sentiment indicator up 2.2 pp m/m in January
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
OUTLOOK 2021 Georgia
Iran’s President Khamenei menaces private citizen Trump
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
OUTLOOK 2021 Mongolia
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
The two largest shareholders in London-listed Kazakh copper miner KAZ Minerals, chairman Oleg Novachuk and director Vladimir Kim, have announced a £3bn all-cash buyout offer that would take the company private after 15 years on the LSE. The offer is for the 61% of shares in the company they do not already own, KAZ Minerals said on October 28.
The offer is set at £6.40 per share, a 12% premium to October 27's closing price of £5.71 per share.
The shares rose by 10% on October 28 to £626 per share after the announcement—the share price in KAZ Minerals has risen 15% in the year to date. Copper prices this year have gained 10% to date thanks to a demand recovery in China.
The buyout will take place via the Nova Resources consortium created by the two shareholders for the purpose. Kim and Novachuk aim to cover the deal via a loan from Russian investment bank VTB, Interfax news agency reported.
The move to take KAZ Minerals private echoes earlier deals at Vedanta Resources and another Kazakh company, Eurasian Natural Resources Corp, which both listed during the 2000s commodity boom. While they’ve all left the exchange for different reasons, London investors ultimately no longer valued the companies as highly as their biggest owners did, Bloomberg noted.
“The increasing ESG [environmental, social and governance] scrutiny from investors hasn’t helped developing market resource companies,” said Grant Sporre, a Bloomberg Intelligence analyst. “Many investors now see the risk-reward balance skewed to the downside, and in a sense it reflects the de-globalization sentiment at the moment.”
KAZ Minerals and its subsidiaries engage in mining and processing copper and other metals in Kazakhstan and Kyrgyzstan. The company operates the Aktogay and Bozshakol open pit copper mines in Kazakhstan along with three underground mines. It is also developing the Bozymchak copper-gold mine in Kyrgyzstan. Moreover, the firm is developing the Baimskaya copper deposit in Russia’s Chukotka autonomous region.
‘Rationale for the offer’
Kaz Minerals said an independent committee of the board was recommending shareholders accept the offer. Novachuk explained the rationale for the offer as a result of the company’s “higher risk, capital intensive strategy”, which may be “misaligned with the preference of many investors in the mining sector.” Nova Resources also said separately that the development of the Baimskaya copper mine in Russia, bought by KAZ Minerals in 2018, “would be best undertaken away from public markets as a private company”.
"In reaching its decision to recommend the terms of the acquisition, the Independent Committee of Kaz Minerals has taken account of both the long-term potential value of Kaz Minerals and the risks inherent in achieving this value," KAZ Minerals said.
"The Independent Committee believes that the acquisition provides Kaz Minerals shareholders with a fair value for Kaz Minerals' operating assets and development portfolio in Kazakhstan and Kyrgyzstan, and crystallises a value for Baimskaya that reflects the Independent Committee's view of the increasing risks in this project," the company added.
The $900mn purchase of the undeveloped Baimskaya mine surprised shareholders, leading to a sell-off in the stock after the announcement of the purchase. The mine’s development is set to cost $7bn and take seven years to carry out. KAZ Minerals referred to the mine as one of the world’s biggest undeveloped copper assets.
“Mr Kim and I believe that Kaz Minerals has made notable progress as a public company since listing on the London Stock Exchange in 2005,” Novachuk said. “However, driven by the current market uncertainty and the corporate circumstances of sequential development projects, we believe that Kaz Minerals’ long-term interests would be best served as a private company.”
One of the conditions for the acquisition requires a court approval of the Nova Resources proposal by shareholders—representing no less than 75% value of KAZ Minerals shares—in court. The holders of shares owned by Nova Resources (39.4%) will not be permitted to vote in the court proceedings. Despite the necessity of a court approval, Nova Resources reserves the right for an acquisition by way of a takeover offer.
‘Court approval may fail’
BCS Global Markets said in a note on October 29 that it sees a probability that court approval may fail. BCS posited that this could lead to the takeover offer, resulting in a new higher offer price than the current offer—positive for the company share price and minorities.
“We maintain a ‘Hold’ recommendation on KAZ Minerals (12MF TP of GBP 6.8/share), despite the offer at GBP 6.4/share, which we consider to be fair at current copper and gold prices. The call reflects a reasonable possibility that court approval may fail, resulting in higher offers on the takeover route, BCS said.
Senior analyst at Sova Capital, Yuri Vlasov, said in a note that Sova recommends “KAZ Minerals shareholders accept the buyout offer of GBp 640/share, as it is close to our TP of GBp 670/share”.
“The decision to take the company private is likely linked to the $7bn development of Baimskaya, we consider,” Vlasov added.
“The buyout is subject to antitrust and regulatory approval, and the completion of any deal is not expected until 1H21,” he said.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at firstname.lastname@example.org
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: