ZAT on course for ZAP buyout despite pricing challenge - bank

13 March 2013 15:03  [Source: ICIS news]

LONDON (ICIS)--Zaklady Azoty Tarnow (ZAT) remains on course to buy out minority shareholders in fellow Polish chemical group Zaklady Azotowe Pulawy (ZAP) despite a challenge to the pricing of its bid, an investment bank said on Wednesday.

“While the negotiation game [with the minority shareholders is likely to continue], our central scenario assumes the buyout of the minorities and the de-listing of ZAP once the transaction has been completed,” WOOD & Company said in a note to investors.

ZAT, which on 14 January gained an 83.7% stake in ZAP following a share swap offer, on 7 March began a share call for the 16.3% of the fertilizer, melamine and caprolactam (capro) producer that it does not own.

However, the Polish Financial Supervision Authority (KNF) has been asked by minority shareholders in ZAP for an opinion on whether the zloty (Zl) 56.05 ($17.63, €13.54) per share which ZAT is offering to holders of the 16.3% conforms with Polish financial regulations.

Those regulations require a follow-up tender price to be no lower than the 3-6-month average stock price of the buyout target firm, as well as no lower than the price offered in the original deal, WOOD & Company said.

“According to [the minority] shareholders, the price offered should be based not on the 2.5 share swap parity and the 6-month average ZAT price of Zl 49.23, but on ZAT's share price on the day of the swap – Zl 56.05 – which implies a minimum tender price of around Zl 140/share,” the bank said.

The share call is scheduled to end on 8 April.

ZAT has started trading under the Grupa Azoty brand name, which it says will also apply to all its subsidiaries once its ongoing merger and consolidation process with ZAP is completed.

($1 = €0.77, $1 = Zl 3.18, €1 = Zl 4.14)

By: Will Conroy
+44 20 8652 3214

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