Sector: Metals
The Severstal company has made obligatory buyout offers to shareholders of its subsidiary companies: Karelsky Okatysh, Olkon and Severstal-Metiz. All of the offers were made with a premium to the current market prices of the shares, which reflects the healthy financial state of Severstal and its aspiration to improve its image.
It was reported on August 1 that the Severstal steel company and its subsidiary, the Holding Mining Company, had made buyout offers to three companies; Severstal-Metiz, Karelsky Okatysh and Olkon. The buyout offers are obligatory, and were made with a premium to the current stock valuations. Karelsky Okatysh shares were estimated with a 21.6% premium to the average between their bid and ask prices on RTS Board. Olkon shares were valued 25.6% higher and Severstal-Metiz shares 9.76% higher.
Table. Parameters of the Severstal buyout offer
| Issuer | Company that has made a buyout offer | Share in issuer | Buyout offer price | Average between bid and ask prices on RTS Board at the close on July 31 | Buyout offer premium to the closing price on RTS Board on July 31 | Date of compiling a shareholder register |
|---|
| Karelsky Okatysh | Holding Mining Company | 95.16% | RUB 32, 832.5 (USD1,401.98) | $1152.5 | 21.65% | 26.09.2008 | | Olkon | Holding Mining Company | 95.53% | RUB 22, 188 (USD 947.45) | $754.5 | 25.57% | 26.09.2008 | | Severstal-Metiz | Severstal | 97.01% | RUB 186.97 ð. (USD7.98) | $7.27 | 9.76% | 46 days after the date of making the buyout offer (31. 07. 2008) |
Source: AK&M agency data, Finam estimates
All the buyout offers were made with a premium to the companies’ stock valuations as of July 31, 2008 and to the average market prices of the shares so far this year. In our view, the premium reflects the sound financial position of the company and its aspiration to improve its image. Severstal is expected to spend around USD 108 million buying out its three subsidiary companies, an insignificant sum given the book value of the company’s cash assets and short-term financial investments of USD 2.5 billion in 1Q 2008. Sulinov Aleksey
Other comments of the day
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Severstal
Capitalization: $3 164 182 254,70
Common shares:
Price: $3,14
Delta week: 23,2%
Delta month: -21,5%
Delta year: -86,4%
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0.569
0.073
