Kernel initiates buyback of Ukrros shares

Ukrros (UROS UK) shareholders, at a September 14 EGM, will consider buying back shares from minorities, the majority shareholder Kernel informed last Friday. Kernel announced the acquisition of a 71% stake in Ukrros for USD 42 mln in March 2011 (implying a MCap of USD 59 mln or USD 0.56/share) and later failed to agree with Ukrros minorities on a buyback at a reasonable price.

Alexander Paraschiy: The turmoil around the deal with Ukrros is the fly in the ointment of Kernel’s reputation among investors. An Ukrros share buyback can become an important move toward improving Kernel’s corporate governance profile, but only if the deal is done at an affordable price (closer to Kernel’s implied acquisition price, UAH 4.50/share, or the market price prior to M&A announcement, UAH 3.33/share). Current legislation allows Ukrros to do a buyback at any price that exceeds the “market”. The market can be defined as price of last deal on a stock exchange (UAH 0.97/share), or, as Ukrros is illiquid stock, it can be set via an independent appraisal.