Eurasian Natural Resources Corporation (ENRC), the London listed Kazakh miner, confirmed yesterday that it was in "advanced discussions" with AIM-listed Camec over a possible $950m all cash takeover, with analysts quick to point out that the bid could lead to other groups making rival offers.
AIM-listed Camec, or Central African Mining and Exploration Corporation, which is led by former England test cricketer Phil Edmonds, said in July that it had been approached by unnamed parties. A number of analysts have predicted that ENRC would be interested given the two companies' respective assets, and because ENRC has been under pressure from shareholders to explain what it intends to do the $2bn of spare cash it has on its balance sheet. A statement issued by ENRC confirmed the discussions but stressed, "that there can be no certainty that any such transaction will proceed".
Brock Salier, an analyst at Ambrian Partners, said that a rival bid from Chinese groups could lead to ENRC having to increase its offer: "Two key factors could trigger improved returns. CAMEC shareholders holding out for a higher bid or a counter bid, notably from Chinese parties, which, in our view, would see the cobalt off-take as a key strategic holding," he said.
"However, we would expect any Chinese bid to be for only 29.9 per cent of the company (or alternatively offer to fund an equity raise to take them to 29.9 per cent), as the Chinese typically prefer off-take in exchange for an equity stake rather than outright control of mining companies."
China Investment Corporation, a sovereign wealth fund, and the Brazilian mining giant Vale are both thought to be interested in Camec's assets and were mentioned as potential suitors in July, when Camec first confirmed the approach.
Camec, whose share price closed down 3.85 per cent yesterday, at 18.75p, operates in a number of African countries. ENRC's shares finished up 6.45 per cent at 916.5p yesterday.Reuse content