Thought of the day re ENRC & KAZ

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From today’s FT – ENRC: minorities deserve more: The scandal-tainted Kazakh miner has lurched from one self-inflicted mishap to another in the past year; its share price is the thermometer – down 43%. Now, as the U.K. Serious Fraud Office begins an investigation into the London-listed company, its founding oligarchs have come up with a buyout offer. Then again, ENRC may be worth a lot less as a listed company than it might be in private hands. The Founders and the Kazakh government, which own a combined 56% of ENRC, have offered 175p in cash and 0.231 of a share in Kazakhmys, another London-listed Kazakh mining company, for each ENRC share. That amounts to about 260p a share and values ENRC at £3.3 billion. Kazakhmys’s share price, meanwhile, is about 5% below the 370p used by the consortium in making the offer. The offer values ENRC at barely 2.5 times 2013 earnings before interest, tax, depreciation and amortisation. Analysts reckon that ENRC is worth upwards of £6 a share on a sum-of-the-parts basis given the quality of its assets.

Kaz trade, even at the low ball bid on the table, at just around 2 times 2013 earnings… Go figure. If ENRC are cheap then Gawd knows what KAZ are…

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