Metinvest to squeeze out minority shareholders of Avdiyivka Coke

Avdiyivka Coke (AVDK UK), a Ukrainian subsidiary of
Metinvest (METINV), Ukraine’s largest steelmaker, announced on May 2 that
Barlenco Ltd. – a Cyprus company affiliated with the majority owners of the
company – intends to squeeze out Avdiyivka Coke’s minority shareholders.

Barlenco intends to acquire the 5% total minority
stake, according to Avdiyivka Coke’s filing, which also mentioned that the
highest price at which the majority owners acquired Avdiyivka Coke’s shares
during the last twelve months is UAH 15 per share.

Dmytro Khoroshun: The squeeze out will be positive for Metinvest because it improves
corporate governance by eliminating the bureaucratic burden and legal risks
attached to the current quasi-public status of these assets. The squeeze out
price cannot be lower than the UAH 15 per share level mentioned in the filing,
and at that price Metinvest will spend about USD 5.6 mln on the minority
shareholder stakes. This will value the entire company’s equity at USD 112 mln.
Considering that Avdiyivka Coke’s 2017 net income amounted to USD 107 mln, such
a valuation looks several times less than the company’s fair value.