Refile: UPDATE 4-Russian gold miner Polyus says Fosun stake deal scrapped
16/01/2018 04:19
(Corrects dateline to MOSCOW/HONG KONG from MOSCOW/BEIJING)
By Polina Ivanova and Julie Zhu
MOSCOW/HONG KONG, Jan 16 (Reuters) - Russia's largest gold
miner Polyus PLZL.MM said on Monday that plans to sell a 10
percent stake to a consortium led by China's Fosun International
0656.HK had been dropped after one of the conditions of the
agreement was not met.
Russia, the world's third largest gold producer, had been
looking for investments from Asian countries, including China,
since sanctions were imposed on Moscow by the West over its
actions in Ukraine.
The Fosun-led consortium had been in talks since 2016 to buy
a large minority stake in Polyus, which is controlled by the
family of Russian tycoon Suleiman Kerimov. Kerimov was arrested
as part of a tax evasion case in France late last year.
urn:newsml:reuters.com:*:nL4N1D41CN urn:newsml:reuters.com:*:nL8N1NR64Z
Shares in the Russian gold producer fell 3.6 percent to a
five-month low after news the $887 million deal had fallen
through, leaving the company the worst performer on Russia's
MOEX index .MCX . urn:newsml:reuters.com:*:nL8N1PA1MJ
"After the condition precedent was not satisfied, the
parties discussed further options but did not reach a consensus,
following which Polyus Gold International Limited proposed to
terminate the agreement," Polyus said in its statement.
"The parties agreed to terminate the agreement, including
the option for the consortium to acquire an additional 5 percent
of the company's share capital pursuant to the agreement," the
company said.
Polyus declined further comment.
According to one source with knowledge of the matter, the
decision, made jointly by the companies, was due in part to
Kerimov's arrest as this cast uncertainty over Polyus's
prospects and sent the company's share price down.
GOLD TO BLAME
The deal for the Fosun-led consortium to buy 12,561,868
ordinary shares was signed in May 2017 and later delayed until
February this year. urn:newsml:reuters.com:*:nL8N1N18G2
Polyus delisted from the London Stock Exchange in 2015, but
it returned to London in June last year, buoyed by a rise in
global gold prices XAU= and news of the Fosun-led deal.
urn:newsml:reuters.com:*:nL8N1JR0IM
Another source familiar with the deal said that Polyus'
interest in the Fosun deal has faded after the London listing
and especially as the gold price was on the rise, pushing the
company's value higher.
"Initially, this was a good deal but something went wrong
... After (the) IPO Polyus' interest has faded but there are
multiple reasons... (I think) Kerimov - is the last thing to
blame," the source said.
Global gold prices stood at around $1,339.7 per ounce on
Monday, up from about $1,268 on May 31 when the deal was
announced. urn:newsml:reuters.com:*:nFWN1IX0JE urn:newsml:reuters.com:*:nR4N1FA01F
The Chinese deal had valued Polyus at $70.6 per share, which
was at the upper end of the price range for its share offer in
June. Polyus shares closed at 4,382 roubles ($77.79) per share
in Moscow on Monday. urn:newsml:reuters.com:*:nL8N1JC112
Polyus is set to increase its dominance as Russia's largest
gold producer towards the end of this decade as its Natalka gold
deposit in the country's far east is increasing its capacity.
urn:newsml:reuters.com:*:nL8N1LM2WK
Fosun's interest in the Russian gold miner came when a
number of Chinese companies were targeting gold mine
acquisitions to build on domestic demand amid the global
recovery in prices.
China, the world's top consumer, producer and importer of
gold, has ambitions to be a global price setter.
It was to be the Chinese group's first Russian deal. Fosun,
one of China's most prolific dealmakers headed by billionaire
Guo Guangchang, had already set up two subsidiary companies,
Fosun Management (Russia) and Fosun Eurasia Capital, with the
aim of building its asset management business in Russia and
neighbouring regions, according to the company's website.
The Shanghai-based conglomerate is best known outside China
for its portfolio of businesses including French resort chain
Club Med, margarine maker St Hubert and Portugal's largest
listed bank Millennium BCP.LS .
The collapse of the Polyus deal marks a setback for Fosun,
which along with other Chinese conglomerates such as Dalian
Wanda and HNA Group has dialled back on some ambitions abroad
after Beijing stepped up scrutiny of outbound dealmaking,
notably in sectors such as property, hotels and entertainment.
Fosun has already pared back its foreign real estate
portfolio. It sold off a Sydney office tower for A$142.5 million
($109 million) this week and is also selling Lloyds Chambers in
London.
($1 = 56.3302 roubles)
(Additional reporting by Olga Popova and Andrey Kuzmin in
MOSCOW; Editing by Katya Golubkova, Mark Potter and Jane
Merriman)
((((p.ivanova@thomsonreuters.com;))))
Keywords: POLYUS FOSUN INTL/DEALS