Summa to buy control of transport firm FESCO

Russian investment and trading group Summa will make an offer to minor shareholders in transport group FESCO after agreeing to buy the controlling stake of businessman Sergei Generalov, the company’s President said on Tuesday. Shares in FESCO jumped 30 per cent on the announcement as investors bet on a possible mandatory offer for their stock at a premium to the company’s market value. The shares later settled to be up about 25 per cent at 11.5 roubles by 1204 GMT, valuing the group at 33.9 billion roubles ($1.04 billion). The deal marks the latest move by Summa into Russia’s ports and rail sector, viewed as a high-growth opportunity by business tycoons and investors because of its importance in carrying Russia’s valuable metals and grain exports out of the country. Summa, owned by tycoon Ziyavudin Magomedov, will buy Generalov’s 56 per cent shareholding in FESCO on top of a stake of about 15 per cent that it has already secured from the open market, group president Alexander Vinokurov told reporters. “By the time of closing, we will have about 70 per cent of FESCO shares,” Vinokurov said, adding that the investment group would go to minor shareholders with an offer after the close of the transaction. Negotiations between Summa and Generalov were reported by Reuters last month, but Vinokurov said that Summa is now also in talks with the European Bank for Reconstruction and Development (EBRD) about buying its 3.74 per cent stake in FESCO and has eyes on a 7 per cent stake owned by the Swedish fund manager East Capital. He declined to comment on the financial details. A mandatory offer must be made to minor shareholders at the last price paid for stock if a buyer exceeds a certain threshold, but a voluntary offer could be set at a lower price. “If it is a mandatory offer, then of course (it will be good for minorities) as they will get a good premium to the share price ... (but) the realities of Russia lead us to be sceptical about the offer and its price,” said Renaissance Capital analyst Alexander Kazbegi. The swoop for FESCO is one of a number of ongoing deals involving the acquisitive Summa Group —viewed in the industry as having close ties to Dmitry Medvedev, who was appointed prime minister by President Vladimir Putin. Its main assets include Novorossiysk Commercial Sea Port, while it recently agreed to pay almost 6 billion roubles ($184.91 million) for a 50 per cent-minus-one-share stake in state grain trader United Grain Company. The company has also been linked to the potential sale of Moscow’s Domodedovo airport and this month emerged as the surprise contender for next-generation 4G wireless telecoms licences. FESCO’s asset portfolio also includes 21 per cent of state-controlled rail group Transcontainer. The Russian government has said it wants to further privatise Transcontainer, but it is not yet clear how much will be put on the auction block or when. The deal marks the latest move by Summa into Russia’s ports and rail sector, viewed as a high-growth opportunity by business tycoons and investors because of its importance in carrying Russia’s valuable metals and grain exports out of the country. From gulftoday