Interpipe Sells Nikopol Ferroalloy (NFER: SELL) To Russian Companies

Renova and Evrazholding, controlled by Russian tycoons Viktor Vekselberg and Aleksandr Abramov, respectively, will buy a ~74% stake in NFER for an estimated price of USD 380 mln. Concorde Capital: According to the transaction price, NFER will have an implied value of ~USD 515. This indicates a significant premium over our estimated fair value of USD 382.4 mln and current market capitalization of USD 470.5 mln. The purchase became possible on June 23, after the Kyiv’s Pechersk court stopped legal proceedings on a lawsuit involving NFER. The suit had to do with the legality of NFER’s privatization by its current owner, Interpipe, in 2003. Earlier, Prime Minister Yuliya Tymoshenko stated that she considered NFER’s 50% stake to be the state property. Thus, Renova and Evrazholding likely joined forces to purchase NFER to share the political risk. While the companies are purchasing NFER in good faith, they may face a conflict with the Ukrainian authorities over the deal.