KazakhGold Group said Wednesday that it would take over its parent Polyus Gold in a $9.4 billion deal, creating the largest producer of the metal among the former Soviet republics and making it easier for the group to seek acquisitions.
The combination under a single listing on the London Stock Exchange will provide “an attractive acquisition currency for future expansion and consolidation within the gold sector,” KazakhGold said.
The takeover would allow Polyus to bypass a local law capping at 25 percent the shares of a company that can be held as depositary receipts, giving it access to more investors on international markets.
“This news is expected but still positive for the stock,” said Valentina Bogomolova, an analyst at Nomura Holding.
KazakhGold agreed with billionaires Mikhail Prokhorov and Suleiman Kerimov, Polyus’ main shareholders, to acquire 74.3 percent of the company’s stock in exchange for its own shares, according to the statement. The company also struck an accord with Polyus subsidiary Jenington International Inc.
The proposed terms call for 9.260 KazakhGold global depository receipts to be exchanged for each Polyus share, and 4.885 KazakhGold GDRs for each Polyus American Depositary Share.
The ratios reflect a Polyus share value of about $48.25, every two Polyus ADSs at about $50.90 and each KazakhGold GDR at about $5.21, according to the statement. That values Polyus’ issued share capital at about $9.4 billion.