11 Apr 2019 10:38

Cherkizovo calls off share offering, cites current market situation

MOSCOW. April 11 (Interfax) - Cherkizovo Group , one of Russia's largest meat producers has officially announced that it is calling off a planned offering of its shares on the Moscow Exchange "due to current market conditions."

"While feedback from investors and the market generally was supportive of Cherkizovo's compelling story, the current capital markets environment does not appear to be conducive to realizing our objectives of creating a broad, liquid market for our shares at a valuation which we believe reflects the strength of our market leadership position, operating performance, dividend potential and the attractive potential we see in our business," Cherkizovo CEO Sergei Mikhailov was quoted as saying in a company press release.

"We demonstrated our commitment to delivering value to our shareholders through sustained growth in earnings and our existing dividend policy. Cherkizovo continues to make excellent progress in implementing its strategy and we believe that our medium to long-term outlook is strong. We remain committed to continuing to deliver significant value to our shareholders and maintaining high standards of corporate governance and transparency. We appreciate the time investors have taken to evaluate our business and the interest shown to date," Mikhailov said.

Cherkizovo announced plans in mid-March to carry out an offering of its common shares listed on the Moscow Exchange. Cherkizovo planned to carry out the deal a year ago, but it was deferred due to the spike in volatility on the stock market following the imposition of tough U.S. sanctions against Russia in early April 2018.

Last week, the company announced price guidance for the offering of 1,875-2,125 rubles per share, valuing Cherkizovo at 89.2 billion-101.7 billion rubles.

The price range announced by Cherkizovo is unjustifiably high, even its lower end, Gazprombank senior analyst Marat Ibragimov said. He recalled that in 2017 Cherkizovo bought out its shares from Prosperity at a price of 1,300 rubles per share.