Fairfax Financial gains state approval in attempt to acquire Astarta stake

The Anti-Monopoly Committee of Ukraine granted permission on Nov. 3 for Fairfax Financial Holdings (FFH CN) to acquire options in shares in Ukraine’s leading sugar producer Astarta (AST PW) that would give it the second-largest stake at 27.79%. In particular, the ruling allows Fairfax Financial to purchase in the first phase a 9.99% stake in agricultural and sugar holding Astarta (AST PW), which 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.

As part of the deal, Fairfax also holds an option to purchase another 9.99% stake owned by Korotkov and then what would be the remainder of his shares, which amount to a 7.8% stake. On top of that, Korotkov would have the right to put all of his shares to Fairfax. Once the deal is finalized, expected by Astarta by Feb. 24, 2017, the company’s two biggest shareholders will be Ivanchyk (36.0%) and Fairfax (27.79%).

Fairfax is a Toronto-listed property/casualty insurance and investment management company with USD 3.9 bln in equity investments. Last year, the holding acquired a 5.35% stake in Ukrainian egg producer Ovostar Union (OVO PW). 

Igor Zholonkivskyi: As we pointed out previously, we think the entrance of a more involved, large shareholder should benefit Astarta and should not cause any drastic changes in the company. With sugar prices being currently at their four-year highs, Astarta should produce solid financial results in 2016. We maintain our positive view of Astarta stock, although acknowledge that there is a risk of a correction in sugar prices in 2017. While Astarta is gradually decreasing its dependence on a single commodity, sugar still accounted for about 45% of its total revenues in 2015.