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Potential Kazakhmys merger won't be "reverse takeover" - Kazakhmys
Moscow, July 16 2008
A potential merger involving Kazakhmys that was reported on Monday will not be a so-called reverse takeover, the Kazakh company said.
The Financial Times reported on Monday that Kazakhmys is holding merger discussions with Metalloinvest, the Russian metals conglomerate controlled by billionaire Alisher Usmanov
"The deal is being structured as a reverse takeover and should see Mr Usmanov emerge with a controlling stake in the enlarged business, which would be re-listed on the London Stock Exchange. The merged company is expected to have a market value of around $50 billion, with Lehman Brothers providing the primary corporate finance advice," the FT said.
The FT said the composition of the new company's board of directors is still under negotiations, but it will have to take into account that Kazakhmys board chairman Vladimir Kim controls 45% of the company. The Kazakh government also owns a 15% interest in the company.
Metalloinvest has declined comment on the report.
Kazakhmys stock soared 8.2% to 1,544 pence upon news of the possible merger.
If the merger takes place on the core of the listed Kazkhmys, it would automatically make Metalloinvest a public company. Thus, the potential deal could become a kind of alternative IPO for Metalloinvest. Market analysts, however, say a share placement by Metalloinvest would simplify the merger procedure since Usmanov's company would receive a market appraisal.
Metalloinvest has expressed interest in copper assets on several occasions. Last week, Mikhailovsky GOK (MGOK), a major iron ore producer from Russia's Kursk region and a member of the Metalloinvest holding, applied to bid at a tender for the rights to the big Udokan copper field in Russia's Chita region. If Metalloinvest wins the tender, the state corporation Russian Technologies could team up to develop the field. Russian Technologies views its possible involvement in Udokan and the development of its mining and metallurgical sector in general in the context of synergy with the Russian-Mongolian Erdenet copper mining joint venture, which could become part of the corporation. In addition, Russian Technologies has a verbal agreement with MMC Norilsk Nickel co-owner Vladimir Potanin who would also take part in the tender.
Kazakhmys is Kazakhstan's largest copper producer. The corporation consists of four production companies: Zhezkazganstvetmet, Balkhashtsvetmet, Vostoktsvetmet, Karagandatsvetmet. It also has oil and gold producing subsidiaries.
Kazakhmys said at the end of March that it was holding preliminary talks with the Kazakh government and had discussed various options, including the possible acquisition of new upstream assets in Kazakhstan in exchange for the Kazakh government acquiring a stake in the corporation.A potential merger involving Kazakhmys that was reported on Monday will not be a so-called reverse takeover, the Kazakh company said.