New Energy fund, acting on behalf of RusHydro, has made a buyout offer to the minority shareholders of Ryazan Energy Retail Company (RTS: RZSB), Interfax reported. The buyout price is RUB 6.21 per share. The energy retailer received the offer on July 14. The offer shall expire 80 days after the moment of its reception, i.e. on October 2.
In March, New Energy won the auction to sell off UES's stake in Ryazan Energy Retail Company. A total of 49% of the energy retailer's charter capital were put on auction. The share package was purchased for RUB 630 million. Therefore, RusHydro paid RUB 6.21 per share. In July, the fund filed the offer for Ryazan Energy Retail Company to the Federal Financial Markets Service (FFMS), but the authority found some defects in the offer and ordered corrections. In future, RusHydro plans to merge its energy retail assets into a holding.
Since the offer and its price were expected by the market, the spread between the current valuations and the offer price amounts to nearly 8%. In line with our estimates, the company is currently overvalued; therefore, we recommend shareholders to accept the offer. After the expiry of the offer, the stock valuations of Ryazan Energy Retail Company will most likely fall.
The fair value of Ryazan Energy Retail Company (RTS: RZSB) is USD 0.105 per share, which corresponds to a Sell recommendation.
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