Just a thought for bulls of KAZ but, given that Glencore were seriously considering a bid for ENRC in the summer of 2011, and at a mooted price of almost £10 per share, what chance that either they or another party look to actually purchase KAZ’s key 26% stake? 26% is a key level as a 75% holding allows one to push through special resolutions and so results in effectively complete control. The holder of 26% could block this.
Any party taking KAZ’s 26% stake could then use it as a lever to get ENRC to pay proper value (widely seen to be towards 400p) or indeed remain within ENRC in a private capacity as a “coat-tailer” on the opportunistic buyout.
There have been noises in the press since the announcement of last Friday that KAZ Chairman Vladimir Kim might just go along with the Kazakh Govt and the ENRC oligarch major shareholders in a cheap deal but we don’t buy that line. Kim has a fiduciary responsibility to his KAZ shareholders and that means extracting full value for the stake in ENRC – a stake that was purchased on average at in excess of 400p per share. Secondly, given his loans pledge on his KAZ shares, he has a real vested interest in getting a proper valuation back on his stock again – a ‘sweetheart’ cheap deal on ENRC hardly achievesthis.
We maintain that we will see a 4 handle on KAZ stock sooner rather than later and that, as ever in this part of the world, there are a few twists and turns to come in this saga… It not being quite as sewn up as some would have you believe.