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.

KAZ Minerals: Sweetened Offer but Maybe Not Convincing Enough

Event-Driven

<p>Nova Resources BV has agreed to acquire the remaining 60.62% interest in Kazakh copper miner <a href="https://www.smartkarma.com/entities/kaz-minerals-plc" target="_blank" data-smartkarma-citation="entities:21999:1" rel="noopener">Kaz Minerals (KAZ LN)</a> it does not already own.</p>
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<li>Nova will pay 640p per share in cash</li>
<li>The deal that values the Kazakh copper producer at about £3.0 bn.</li>
<li>Nova is controlled by KAZ Chairman Oleg Novachuk and KAZ Director (and former Chairman) Vladimir Kim.</li>
</ul>
<p>Upon the news release, KAZ shares went up by 9.5%.</p>
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<p>Adding the stakes owned the main shareholders plus the pledges received gives 45.51%. This and the operational and political risks involved makes it difficult that any interloper would dare to come out with an improved bid.</p>
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<p>The bid represents 3x implied EV/Forward revenue (vs. 2.0x mean for comparable miners), 5.4x EV/Forward EBITDA (vs. 4.5x for comparable miners) and 7.2x P/Forward EPS. Antofagasta trades at 3.2x EV/Forward revenue and 6.2x EV/Forward EBITDA.</p>
<p>The deal value/consensus NAV is 100.4%. On this basis, the price offered looks fair.</p>
<p>This deal has all the chances to complete. The current price of 626p offers a<strong> 2.2% gross spread (c.9% annualised), which seems an interesting entry level, in my view. </strong></p>

Nova Resources BV has agreed to acquire the remaining 60.62% interest in Kazakh copper miner Kaz Minerals (KAZ LN) it does not already own.

Nova will pay 640p per share in cash
The deal that values the Kazakh copper producer at about £3.0 bn.
Nova is controlled by KAZ Chairman Oleg Novachuk and KAZ Director (and former Chairman) Vladimir Kim.

Upon the news release, KAZ shares went up by 9.5%.


Adding the stakes owned the main shareholders plus the pledges received gives 45.51%. This and the operational and political risks involved makes it difficult that any interloper would dare to come out with an improved bid.


The bid represents 3x implied EV/Forward revenue (vs. 2.0x mean for comparable miners), 5.4x EV/Forward EBITDA (vs. 4.5x for comparable miners) and 7.2x P/Forward EPS. Antofagasta trades at 3.2x EV/Forward revenue and 6.2x EV/Forward EBITDA.
The deal value/consensus NAV is 100.4%. On this basis, the price offered looks fair.
This deal has all the chances to complete. The current price of 626p offers a 2.2% gross spread (c.9% annualised), which seems an interesting entry level, in my view. 

KAZ Minerals

KAZ Minerals Buyout: Over to You