Daily analyst comments
Energopromsbyt makes buyout offer to TGK-14 minority holders
24.06.09 10:44
Energopromsbyt has made a buyout offer to TGK-14 minority shareholders at RUB 0.002642 per share. The fact that the offer was made below the market price may put short-term pressure on TGK-14 stock valuations.
Energopromsbyt, a joint-venture of Russian Railways and ESN group, has made a buyout offer to TGK-14 (RTS: TGKN) minority shareholders and is ready to purchase some 313.39 billion TGK-14 shares at RUB 0.002642 per share.
Energopromsbyt first attempted to buy out stock from TGK-14 minority shareholders in November 2008; however, the company failed to obtain a bank guarantee in conformity with the offer terms. In early May 2009, Energopromsbyt increased its stake in TGK-14 to 79.91% after purchasing NorNickel’s share package in the genco. As a result, Energopromsbyt again became obliged to make a buyout offer to minority shareholders.
The price of TGK-14 shares on the MICEX stock exchange as of final bell June 23, 2009 was RUB 0.0034 per share, a 29% upside to the offer price. At the same time, based on the EV/Installed Capacity multiple, TGK-14 trades at USD 19 per kW, with USD 99 per kW as the sector average. Therefore, the company is presently undervalued. In our opinion, Energopromsbyt’s offer may put additional pressure on TGK-14 stock valuations in the short-term.
The target price of TGK-14 is USD 0.0006 per share with a SELL rating.