LONDON (Reuters) - Kazakhstan’s government and the trio of founders behind miner ENRC ENRC.L, seeking to take the company private, have offered shares in rival Kazakhmys (KAZ.L) as well as cash in an indicative proposal valuing the group at just under $5 billion.
ENRC’s billionaire co-founders, Alexander Machkevitch, Alijan Ibragimov and Pathokh Chodiev, said last month they were weighing up a buyout of the miner’s minority investors and had the support of the government, which is also a top shareholder.
ENRC’s independent directors Friday said they had rejected a tentative buyout offer and gave the bidding consortium until June 3 to come up with an improved bid. But they did not detail the value or structure of the bid.
In a weekend statement, however, they said the suitors had proposed 175 pence per share in cash, and 0.231 of a Kazakhmys share. At Friday’s closing price of 338.4 pence for Kazakhmys, that adds up to just over 253 pence per share - or 1.5 billion pounds ($2.3 billion) for the roughly 46 percent of ENRC that the trio and the government do not already hold.
That compares to ENRC’s closing price on Friday of 272 pence and its closing price on April 18, the day before the trio declared a possible bid, of just under 230 pence.
Rival miner Kazakhmys is a major shareholder in ENRC, a leftover from a failed takeover bid dating back to before ENRC’s listing. But, though it holds a total of just over a quarter of ENRC’s shares, it has not yet declared its hand.
Instead, the Kazakhmys shares in question will come from the Kazakh government’s almost 27 percent holding in the mining company, according to sources with knowledge of the matter.
An offer at the proposed levels would mark a sharp drop for shareholders who bought into ENRC at its listing or its mid-2008 peak. Since the start of last year alone, the shares have more than halved in value.
The bidding consortium will use the coming two weeks to hammer out its financing for the bid, expected to be supported by Russian banks VTB and Sberbank, already ENRC’s largest lenders, alongside advisers Societe Generale.
ENRC, which mines a range of metals and has assets in Kazakhstan, Democratic Republic of Congo and Brazil, declined to comment.
($1 = 0.6582 British pounds)
Reporting by Clara Ferreira-Marques; editing by Keiron Henderson