European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Event-Driven

On 4 February, Nova Resources caught up with KAZ Minerals' share price bull run and <a href="https://www.kazminerals.com/media/21872/increased-offer-announcement-4-feb-2020.pdf" target="_blank" rel="noopener">sweetened its offer to 780p</a>, just shy of my previous TP of 787p (see my insight <a href="https://www.smartkarma.com/insights/kaz-minerals" target="_blank" data-smartkarma-citation="insights:47013" rel="noopener">KAZ Minerals</a>), in an effort to woo minority shareholders.
<ul>
<li>The increased offer price represents a premium of c. 22% vs. the 640p per share offer (from 28 October) and values the equity of KAZ at £3,685 mn, 6.4x EV/21e EBITDA.</li>
</ul>
Nova and KAZ Minerals aim to complete the deal in H1 2021. If successful, the miner will be delisted in both London and Almaty.
Relevant points:
<ul>
<li>As per the release, the offer is not final, and therefore Nova could raise the offer again.</li>
<li>Over 50% gives chairman Oleg Novachuk and director Vladimir Kim (only shareholders of Nova) a stronger majority compared to which they now have, but to delist KAZ, they need 75% acceptances, whilst to squeeze out minority shareholders and fly solo they need over 90% acceptances.</li>
</ul>
Improving market sentiment, vaccines, industry return to normal and prospects for copper have outrun the initial offer, which in hindsight looks a bit opportunistic. However, this improved offer lays the ground for a "final offer".
<ul>
<li>The shares closed at 799p on 4 February vs the increased 780p offer.</li>
<li>Most shareholders will choose to keep their shares, and they will stand in the way of Nova's plan to delist unless there is another increase in the offer price, in my view.</li>
<li>The tussle is being very civilized so far, there has not been a huge rebellion, but minority shareholders are airing (and arguing) their views.</li>
<li>An improved offer could be made by raising the prospects for Baimskaya.</li>
<li>This offer could come at the lower end of what some investors estimate for Baimskaya, i.e. 846p per KAZ's share, an 8% increase vs. the improved offer and 32% above the original offer, which does not look unreasonable.</li>
</ul>
Recommendation is LONG KAZ LN.
<div>

The shares closed at 799p, 3.3% higher vs. the previous close and 2.4% above the improved offer (with c. £57 mn traded).
</div>

On 4 February, Nova Resources caught up with KAZ Minerals' share price bull run and sweetened its offer to 780p, just shy of my previous TP of 787p (see my insight KAZ Minerals), in an effort to woo minority shareholders.

The increased offer price represents a premium of c. 22% vs. the 640p per share offer (from 28 October) and values the equity of KAZ at £3,685 mn, 6.4x EV/21e EBITDA.

Nova and KAZ Minerals aim to complete the deal in H1 2021. If successful, the miner will be delisted in both London and Almaty.
Relevant points:

As per the release, the offer is not final, and therefore Nova could raise the offer again.
Over 50% gives chairman Oleg Novachuk and director Vladimir Kim (only shareholders of Nova) a stronger majority compared to which they now have, but to delist KAZ, they need 75% acceptances, whilst to squeeze out minority shareholders and fly solo they need over 90% acceptances.

Improving market sentiment, vaccines, industry return to normal and prospects for copper have outrun the initial offer, which in hindsight looks a bit opportunistic. However, this improved offer lays the ground for a "final offer".

The shares closed at 799p on 4 February vs the increased 780p offer.
Most shareholders will choose to keep their shares, and they will stand in the way of Nova's plan to delist unless there is another increase in the offer price, in my view.
The tussle is being very civilized so far, there has not been a huge rebellion, but minority shareholders are airing (and arguing) their views.
An improved offer could be made by raising the prospects for Baimskaya.
This offer could come at the lower end of what some investors estimate for Baimskaya, i.e. 846p per KAZ's share, an 8% increase vs. the improved offer and 32% above the original offer, which does not look unreasonable.

Recommendation is LONG KAZ LN.


The shares closed at 799p, 3.3% higher vs. the previous close and 2.4% above the improved offer (with c. £57 mn traded).


KAZ Minerals: Sweetened Offer but Maybe Not Convincing Enough