According to Interfax, the Acron chemical company is to place USD 2.7 million worth of GDRs on the LSE. The securities will be backed with shares owned by Dorogobuzh, an Acron subsidiary. On Wednesday, the company's BoD gave the green light to a deal between the selling shareholder on the one part and Unicredit, Morgan Stanley, Bank Austria Creditanstalt and Alfa Capital Holdings on the other. Under the deal, Dorogobuzh will sell just under 30,000 Acron shares, 0.6% of its capital, at a price of at least USD 90 per share, which corresponds to the company's current stock valuations. In all, Dorogobuzh owns 8.54% of Acron capital.
According to previous reports, Acron on July 29 dropped its plan to hold an IPO, citing unfavorable market trends. The company intended to float up to 10% of its shares, including 4% owned by Dorogobuzh and 6% belonging to Vyacheslav Kantor, the company's prime owner. The price range for the IPO was set at USD 120 to USD 150 per share, valuing the entire company at USD 5.7 billion to USD 7.2 billion.
In our view, the company's decision should have a beneficial effect on quotations for its shares, broadening the range of its investors. Acron cited adverse conditions on global stock markets as being behind its decision to give up an IPO, while, in fundamental terms, the company has good prospects, given that chemical assets are now in demand. Therefore, a second attempt by the company to place its shares on world markets, once they recover, will likely be more successful. A listing on the LSE will make it easier for the company to use the exchange again in the future. In view of this, the scenario in which the company will expand its free float in the future looks quite plausible.
Our target price for Acron (RTS: AKRN) is USD 135 per share, with an upside of over 50%, which corresponds to a BUY recommendation. We should also note that the company is likely to remain under pressure from unfavorable market trends in the near future.
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