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Chelyabinsk combine denied the acquisition of Serov Ferroalloy Plant

26 August 2014

Taking care of maintaining the status quo in the area of ​​market competition, representatives of the Federal Anti-Monopoly Service did not allow Chelyabinsk Electric Factory buy Serov Ferroalloy Plant in the Sverdlovsk region. Currently, the owner of an asset is the company «Eurasian Natural Resources Corporation», wishing to carry out the sale of the plant, because the territory of Kazakhstan launched a new production. Under assumptions of analysts' enterprise value is about 12 billion. RUB, and among the interested potential buyers called the Ural Mining and Metallurgical Company.

Negotiations between the Combine and the Chelyabinsk Serov Ferroalloy Plant were carried out since the beginning of last year, but in the end the Federal Antimonopoly Service of the Russian Federation, referring to the possible restriction of competition in the market, approval of the application refused. Informed sources confirm the fact that the transaction CHEMK share would increase from 70% to 90%. Serov ferroalloy plant produces chromium ferroalloys, ferroalloys taking on the Russian market to 20%. ferroalloy production volumes in 2011 amounted to 300 000 tonnes in 2012, 295 000 tonnes, in 2013 288 000 tonnes.

Representatives CHEMK and ENRC declined to comment on the arisen situation, but ENRC continues to search for a new owner of the asset. Given the high electricity tariffs and the launch of their own businesses, ENRC continues to lose interest in Serov. Analysts said another scenario — the increase in the sale price or even rejection of the implementation of the enterprise. Alexander Parfenov, an analyst with «Unison Capital», believes that the company does not make sense to get rid of the plant, because it provides a positive cash flow. ENRC is now trying to follow the footsteps of the «Evraz Group» and OJSC «Mechel», who were forced to get rid of its assets. However, ENRC should take into account the fact that the company Serovskoe quite profitable: net income of the first quarter of this year amounted to 399.2 million RUB, sales have brought 429 million RUB… This performance exceeded the results for the same period last year, in addition, the company has no borrowings.

A. Parfenov considers possible for CHEMK attempt to ransom the enterprise through an independent structure, later became controlled by the Chelyabinsk company, however, this option is very risky.

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