KAZ Minerals Chairman Mulls Sweetening $2.4 Billion Buyout

(Bloomberg) -- KAZ Minerals Plc’s chairman is considering an increase to his 1.8 billion-pound ($2.4 billion) buyout offer for the Kazakh copper miner, people with knowledge of the matter said.

Oleg Novachuk’s Nova Resources BV is weighing raising its offer to KAZ independent shareholders to at least 700 pence to 750 pence per share following discussions with some of the company’s biggest investors, the people said.

A fresh proposal could come as soon as this week, according to the people, who asked not to be identified because the information is confidential. Shares of KAZ surged as much as 7.9% on Tuesday, hitting the highest intraday level since August 2018, and were up 1.6% to 756.80 pence at 12:34 p.m. in London.

The stock has been trading above the initial bid price of 640 pence per share for about two months, thanks to a surge in copper prices since the proposal was unveiled. It closed Monday at 745.20 pence, or 16% above the bid, indicating investors expect a bump.

“We see an imminent and substantive offer increase as an inevitability,” said Josh Rosen, a special situations analyst at United First Partners.

Crunch Time

Time is running out if Nova wants to sweeten the proposal, as it’s previously said formal offer documents will be sent out by Feb. 4. An independent board committee in October deemed the terms to be “fair and reasonable” given increasing risks to KAZ’s Baimskaya asset. Still, a KAZ representative said last month that directors will continue to keep their recommendation under review.

Nova said in an Oct. 28 filing that the buyer group “has the appetite for the risk” involved in the development of the company’s projects, which will need years of heavy capital investment. They said that could be a turnoff for many public market investors who are more interested in steady dividend plays.

The situation is fluid, and deliberations on the potential value of an increased bid are ongoing, the people said. Representatives for Nova and KAZ declined to comment on Tuesday.

Fund manager RWC Partners Ltd. last month called on KAZ’s board to terminate the deal process, saying the bid “materially undervalues” the company. Another group of investors led by Maxim Vorobyev, who own 3.6% of the company, has said the offer was trying to “take advantage” of declines in KAZ’s stock due to Covid-19 and doesn’t reflect its growth potential.

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