Kazakhmys to back cut-price ENRC takeover

Marion Dakers

A £3BN deal to take ENRC off the London stock market came a step closer yesterday, despite complaints from the mining group’s independent board members and large shareholder Kazakhmys that it undervalues the firm.

The consortium – made up of ENRC’s founders and the Kazakh state’s investment arm – formally made their bid yesterday, ahead of a Takeover Panel deadline.

The value of their deal has dropped since it was first mooted in May, falling from 260p to 234p per share due to the decline in Kazakhmys shares, which form part of the package.

ENRC’s board members said they were “very disappointed” by the terms, adding that they could not recommend the proposal to the smaller investors that hold the firm’s 18 per cent free float.

London-listed Kazakhmys, which owns a 26 per cent slice of ENRC, reluctantly gave its blessing to the deal yesterday, saying “there is no prospect of obtaining improved terms”.

“The board considers the prospects of realising greater value from ENRC in the short to medium term to be remote and the risks of further erosion in value to be considerable,” Kazakhmys said in a statement, pointing to an ongoing Serious Fraud Office investigation and corporate governance concerns. Under the deal, Kazakhmys will receive $887m (£574m) in cash and take back 77m of its own shares from the consortium, helping boost its free float and balance sheet.

ENRC shares closed down 1.4 per cent at 213.8p yesterday, in line with the rest of the market, while shares in Kazakhmys slumped 13 per cent.