After taking an 83.08% ownership in Ammofos, Phosagro made a voluntary buyout offer to minority shareholders at a price of USD 75 per share, down 3.2x on the current stock valuations. Should the stake be subsequently brought up to 95%, the company could start a forced buyout procedure at below-market price, given the current buyout offer conditions. In view of this, investments in Ammofos could be a high risk.
At the same time, we cannot ignore the formal nature of the announced buyout offer, as by Russian law, a voluntary buyout offer is in effect a mandatory one. Should the company fail to buy out the remaining shares under a forced buyout procedure, Ammofos shares would retain a considerable upside potential in our estimation.
Michael Frolov
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Sector:
Chemicals & Petrochemicals,
Mineral Fertilizers
Company:
Ammophos
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