Out of small investors’ hands – and the FTSE

Elizabeth Fournier

AFTER more than five years in the FTSE 100, ENRC looks likely to become the latest – and final – firm from the former Soviet states to drop out of the blue-chip index.

Though ENRC survived the FTSE reshuffle last month that saw fellow mining giants Polymetal and Evraz slip off their FTSE 100 perch and into the 250, its exit is barely more dignified. After months of boardroom drama and regulatory investigations, it’s hard to believe it’s only been four weeks since ENRC’s potential buyers – the founding consortium led by Alexander Mashkevich – entered the fray with an indicative offer for the group.

While yesterday’s offer of $2.65 (172p) in cash and 0.23 shares in Kazakhmys for each ENRC share is unchanged, it’s no surprise the independent committee set up by the firm’s directors were unimpressed.

Since the initial offer was made shares in Kazakhmys – which fell out of the FTSE 100 in February – have dropped 30 per cent, making the new offer 25p-per-share lower.

Even Kazakhmys, ENRC’s largest single shareholder, whose backing yesterday is likely to push the deal through, acknowledges it is “undervalued”. Kazakhmys has rightly had enough of worrying about how its investment will fare in the fraud squad’s ongoing probe, or whether it’ll be forced out of the FTSE over stricter free-float rules. It can’t wait to get rid of the stake.

The price may be lower than hoped, but the weight off its shoulders will be huge.