Two major shareholders of Polyus Gold on Friday backtracked on their proposal to sell a 5 percent stake in the company, citing unfavorable market conditions.
The sale was canceled because of a lack of demand at the offered price range of $28 to $29 per depositary receipt, a market source told Interfax.
Mikhail Prokhorov’s Onexim Group and Suleiman Kerimov’s Nafta-Moskva had announced the previous day that they wanted to sell 2.5 percent stakes each, in the form of shares or American Depositary Receipts.
Shares in Polyus, Russia’s largest gold miner, fell 3.76 percent Thursday as news of the planned sale emerged. The stock rebounded Friday after the sale was called off, rising 3.9 percent to 1,601.24 rubles ($55.22).
Experts say the drop in price may have soured the deal for Prokhorov and Kerimov, leading to the cancellation of the sale. “I don’t think the shareholders particularly wanted to sell anyway,” UniCredit analyst Marat Gabitov said. “The discount is usually 10 percent to 15 percent, but they were only offering 5 percent. Polyus shares are approaching all-time highs and investors would not have found that an attractive proposition in these conditions.”
Nafta-Moskva owns 36.88 percent of Polyus, while Onexim controls about 30 percent and associated shareholders another 10 percent.
The owners are likely to return to the idea in the future if the gold market remains healthy, said Nikolai Sosnovsky, an analyst at UralSib.
As for their initial reasons to sell, “perhaps they felt that with gold at a peak, and the market capitalization of Polyus quite high, it was time to exit with profit,” Sosnovsky said.
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