Tatyana Nikulshina, a manager with Grant Financial Center, said the city administration has begun negotiations on buying an unspecified amount of a forthcoming re-issue of shares that represents 20 percent of the company's charter capital.
The 2 million shares remained unsold after an unsuccessful public issue in December. But interest in Red October -- the capital's largest confectioner -- has grown since an unsuccessful takeover bid last month by Russian food producer Koloss, backed by the powerful Menatep Bank.
The price of Red October shares has risen from around $5.80 apiece early last month to around $7.50 on Thursday.
Grant's Nikulshina said discussions with the city are centering on price. A Red October shareholders' meeting authorized the board of directors in April to sell the shares at not lower than $6 apiece.
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