The joint-venture of Russian Railways (RZD) and ESN group, Energopromsbyt, has become owner of a 32.2% share package in TGK-14 (RTS: TGKN) and has now closed the deal to acquire part of a UES’ state share package, reports Interfax.
In late June, an auction was held to sell the state share package in TGK-14. The auction winner was Energopromsbyt, which had filed the largest bid of RUB 0.0074 per share. Later, Energopromsbyt paid the same price for the largest part of the TGK-14 additional issue released under the preemptive right. The remaining shares were acquired by NorNickel, which holds a blocking stake in TGK-14, in line with our estimates.
Therefore, pursuant to Russian legislation, Energopromsbyt is obliged to file a buyout offer to the Federal Financial Markets Service (FFMS) within 35 days at RUB 0.0074 per share, an upside of about 14% on the current market valuation. In line with our estimates, the spread between the market valuation and the offer price will gradually get narrower, and is not likely to exceed 7% after the offer is made.
The fair value of TGK-14 (RTS: TGKN) is USD 0.00050 per share, which corresponds to a Buy recommendation.
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