As a result of a voluntary offer, PhosAgro increased its stake in Ammofos from 83.08% to 95.35%, Interfax reports. In June 2008, PhosAgro holding, which had acquired 83.09% of Ammofos shares by that time, presented a voluntary buyout offer to Ammofos minority shareholders at RUB 1,763, or USD 75 per share, a 3.2x downside to the market valuations. Therefore, PhosAgro is now able to urge Ammofos minority holders to present their shares for a forced buyout.
In our view, Ammofos minority holders are currently facing the unfavorable scenario, since PhosAgro will most likely present a forced buyout offer to Ammofos shareholders in the near future. At the same time, the buyout price should be determined based on a valuation carried out by an independent assessor and may turn out to be higher than the voluntary offer price based on the evaluation report of 1 October 2007, as Ammofos, which is the profit center of PhosAgro group, has appreciably increased its financial health. For example, in 1H 2008, Ammofos revenue grew more than 3x y-o-y to USD 945 million, while the company’s net profit advanced more than 8x to USD 398 million.
The target price of Ammofos (RTS: AMMO) is USD 252 per share, a 2.5x increase on the current market valuation.
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