Fairfax Financial acquires 10% stake in Astarta

Fairfax Financial Holdings (FFH CN), a Canadian asset manager, has acquired a 9.99% stake, or about 2.5 million shares, of Ukraine’s leading sugar producer Astarta (AST PW) at a purchase price of PLN 60 per share. Astarta announced the deal’s finalization on Jan. 5.

The 9.99% stake sold to Fairfax Financial consists of a 1.8% stake owned by CEO Viktor Ivanchyk and an 8.19% stake owned by Board Chairman Valeriy Korotkov, currently the second-largest shareholder who is attempting to exit his 25.98% total stake.

The acquisition was the completion of the first phase of the deal, which will result in Fairfax accumulating a 27.79% stake while Ivanchyk will remain the largest shareholder with a 36% stake. Astarta has said it expects the deal will be finalized by Feb. 24, 2017.

 Igor Zholonkivskyi: The deal is progressing as planned, while the announced purchase price of PLN 60 was substantially above the PLN 48-54 range in which the stock traded during the last several months. The reaction from the market was positive as Astarta stock closed at PLN 56 on Jan. 5.

We remain positive on Astarta stock, as the  company is likely to report solid annual financial results for 2016 with the global sugar prices being close to their four-year highs. There is also a risk of a correction in sugar prices in 2017.