Kazakhmys gets blocking stake in ENRC
Kazakhmys, the Kazakh copper producer, has upped its stake in Kazakh rival Eurasian Natural Resources Corporation (ENRC) to 25.02 per cent, effectively preventing its biggest rival from making a hostile bid for it.
The purchase of 35.7m shares, at an average of 1,126p each for a total £402m, will give Kazakhmys the power to veto any special resolutions proposed by ENRC, including a renewed bid for the Kazakh company. The ENRC board requires a 75 per cent majority for any special resolutions.
Relations between the two mining companies have been less than cordial. Kazahmys rejected a 1,550p a share bid from ENRC in May, describing the £7bn offer as “derisory and ill considered”. At the time, Kazakhmys had a market cap of £8bn.
Since then, the Kazakh company has gradually built its share in ENRC, after buying shares worth 7.7 per cent of ENRC from the Kazakh government in June.
Kazakhmys is now likely to push for a board seat at ENRC, having had a request for board representation turned down before ENRC floated on the London Stock Exchange last December.
Charles Cooper, mining analyst at Evolution Securities, said: “This gives Kazakhmys a stronger arm in its dealings with the ENRC board and limits ENRC’s options.”
But he was sceptical about predictions from some observers that a merger between the two would happen sooner rather than the later. He said: “A merger would make strategic sense, but it’s unlikely to happen in the short-term.”
