14 Jan 2010 13:47

Analysts tell TGK-7 minority shareholders to reject IES offer

MOSCOW. Jan 14 (Interfax) - Investment company analysts are recommending that minority shareholders in Volzhskaya TGK (TGK-7) reject the offer to purchase shares made by Viktor Vekselberg's IES Holding.

IES is offering 1.354 rubles ($0.0457) per share.

IES made the offer after its stake in the genco rose to 37.57%.

"Based on the ratio enterprise value/installed capacity, the IES offer values TGK-7 at $199 per kilowatt compared with the current average ratio of $261 per kilowatt. Given that discount, we recommend that minorities reject the offer," Uralsib analysts Matvei Taits and Alexander Seleznev said in a note to investors.

The offer is 39% below the target price ($0.0739) for TGK-7 shares, Troika Dialog said in a report authored by analysts Alexander Kotikov, Igor Vasilyev and Andrei Trufanov. They also recommend that shareholders reject the offer.

Unicredit Securities analyst Dmitry Konovalov concurs, noting that the offer price is substantially lower than the potential value of the shares.

At the same time, the analysts note that the offer price will doubtless serve as the support level for TGK-7 share prices in the medium term.

Volzhskaya TGK received notification of the offer on January 12. It is valid for 70 days.

The consensus forecast price for TGK-7 shares among analysts at five investment banks is currently $0.05754 according to the SPARK database. The consensus recommendation is "Buy".

The highest quote for TGK-7 shares on the RTS on Thursday was $0.04 as of 12:50 p.m.