Kazakhmys dismisses talk of Metalloinvest reverse takeover
16 Jul 2008
Kazakh copper miner Kazakhmys, which was in talks with Russia's Metalloinvest, has dismissed reports that its deal with the Russian mining and metallurgical holding would involve a reverse takeover. Reports have indicated that Kazakhmys plans to create a $50 billion (£25 billion) London-listed mining behemoth.
Metalloinvest is owned by Alisher Usmanov, the Russian titan who also has a stake in the Arsenal Football Club. Until the day before, he was thought to be keen on a reverse deal with Kazakhmys that would have allowed him the advantage of its FTSE 100 listing. Previously, Metalloinvest had wanted to launch an initial public offering (IPO) for up to 25 per cent of its shares, though last week Russian President Medvedev appeared to block the country's companies from seeking foreign listings when he introduced new ownership rules.
Under Medvedev's diktat, foreign ownership in ''strategic'' Russian companies would be limited, and that in turn would limit the appeal of an IPO by Metalloinvest. On the other hand, a reverse takeover of Kazakhmys would allow the mining and metallurgical holding giant to access the London capital market, without going against the Kremlin.
In a statement, Kazakhmys has clarified that it was not ''contemplating the implementation of such a combination through a structure that would be classified as a reverse takeover under the rules of the UK Listing Authority", at least at the present time. The company issued the statement when the Takeover Panel asked for a clarification about the kind of structure the company was considering, since Metalloinvest is not a listed company and has no public track record, and the Panel was reported to have been considering a suspension of trading in Kazakhmys shares.
However, any deal with the Khazakh miner will necessarily need the approval of Vladimir Kim, Kazakhmys's chairman, who holds 39 per cent of the company. The Kazakh government also has a stake in the company.
Reports have indicated that Metalloinvest could be considering other options as well, in lieu of its own London flotation, such as a probable combination with Russian group Norilsk Nickel. Another possibility that has been hinted at is the creating of a ''topco'' company that would retain Kazakhmys' listing, and into which both Kazakhmys and Metalloinvest would put in their assets.
Reports have also noted that the combined entity of Metalloinvest and Kazakhmys could create a larger group that would have sufficient bulk to make a bid for Eurasian Natural Resources Co., the Kazakh iron ore producer, and in which Kazakhmys holds a 22 per cent stake.
