The Cherkizovo Group announced the holding of an SPO.
“Cherkizovo” will hold a secondary placement of shares on the Moscow stock exchange: the paper will be sold as the family of the group’s founders, and the company itself. Together they can attract at least $ 300 million.
Addition to capital
Meat production company Cherkizovo announced a secondary offering of shares (SPO). To finish it is planned in the middle of May, the representative of “Cherkizovo” specified. The placement will be held on the Moscow Stock Exchange. During the placement, shares will be sold by the existing shareholders of the company, including MB Capital Europe Ltd, whose beneficiary is the family of the founder of the group Igor Babaev. The exact number of shares will be determined in the process of forming a book of applications. In addition, shares of the AIC Mikhailovsky (about 6.63% of all outstanding shares) will be sold, wholly owned subsidiary Cherkizovo.
Cherkizovo and the family of the group’s founders intend to receive more than $ 300 million from the sale of shares, it follows from the press release. “Cherkizovo” itself expects to attract about $ 150 million, which will be used to pay off debt obligations and new acquisitions. The amount raised from the sale of shares of the founders’ family will exceed $ 150 million.
After the SPO, it may be decided to issue an additional share issue, which the family of the company’s founders will buy out at the price fixed during the secondary offering of shares, Cherkizovo specifies. Igor Babayev’s family plans to retain strategic control over the company and maintain a majority stake, the report said.
The organizers of the placement are Goldman Sachs International, JP Morgan and Sberbank CIB.
In London, minus, in Moscow plus
About plans “Cherkizovo” for the SPO became known in the middle of last year. In July, Igor Babayev’s family announced the purchase of about 21% of Cherkizovo’s shares and depository receipts from funds and portfolios managed by Prosperity Capital Management at a price of 1,300 rubles. for one share. The total amount of the transaction was about 12 billion rubles. As the general director of Cherkizovo and Babayev’s son Sergey Mikhailov explained then, the group considers various strategies in the capital markets and can increase liquidity in the market, including through SPO, or use shares for mergers and acquisitions. In November 2017, Cherkizovo decided to stop listing of receipts on the London Stock Exchange.
Director of Prosperity Capital Management Alexey Krivoshapko does not exclude that Cherkizovo will be able to interest foreign investors: “We will definitely study this issue. In general, we are ready to buy shares of any normal companies in normal valuation, and Cherkizovo is a normal business. ” Krivoshapko also noted that as part of the last deal, Cherkizovo shares were sold at a price higher than the market price. Earlier, Cherkizovo bought shares at a rather high price, and it is unlikely that investors will want to give a substantial premium this time, said Marat Ibragimov, senior analyst at BCS Global Markets.
On Tuesday, April 3, Cherkizovo shares rose 1.25% on the Moscow stock exchange, to 1215 rubles. for paper. The group’s capitalization exceeded 53.4 billion rubles.
The desire of the company to conduct the placement of shares and essentially return to the Moscow stock exchange, having concentrated all the liquidity on one site, may be caused by interest in preserving the public status, believes Raiffeisenbank senior analyst Natalia Kolupaeva, adding that this may be relevant for the company in the case of M & A transactions , and also in the event that Cherkizovo itself becomes an object for absorption. At the end of last year, Kommersant reported that Igor Babayev’s family is considering the sale of the entire business: according to the sources of the newspaper, negotiations were held with the Rusagro group Vadim Moshkovich and the Thai company CP Foods. The group itself denied that the founders of Cherkizovo intend to sell their business.
The poultry market has been experiencing an excess of supply for the second year, says Gazprombank analyst Darya Snitko. This was reflected in lower prices for products: in December 2017, it fell by 12-13% compared to December of the previous year, which is very significant with positive inflation in the last year. Production costs also declined due to lower grain prices due to a large harvest, but for many companies profitability has declined, adds Snitko. “Usually in such conditions, consolidation of the market increases, companies try to use their competitive advantages from the scale of the business, effective companies can also merge with less efficient or buy problem projects,” the expert says.
Author: Elena Sukhorukova.
Original in Russian: RBC Daily