ENRC Agrees to Purchase Camec for 584 Million Pounds

By Firat Kayakiran

Sept. 18 (Bloomberg) -- Eurasian Natural Resources Corp., a producer of steelmaking raw materials in Kazakhstan, agreed to buy Central African Mining and Exploration Co. for about 584 million pounds ($955 million) as it expands into copper.

The boards of directors of both companies agreed on the cash offer of 20 pence per share, London-based ENRC said today in a statement on the Regulatory News Service. The company now holds 55.18 percent of outstanding Camec shares, it said.

ENRC, which said in May it had $2.4 billion in cash, is looking to grow outside of steelmaking materials. The company will invest 230 million euros ($338 million) in Camec in the next five years to increase copper output to 75,000 metric tons, Chief Executive Officer Felix Vulis said on a conference call.

Buying Camec will give ENRC access to “large copper and cobalt resources in the Democratic Republic of Congo,” Vulis said, adding the company won’t stop looking for mergers and acquisitions. The deal also provides a platinum operation in Zimbabwe, a coal project in Mozambique and a bauxite deposit in Mali. Political risks in Congo “are manageable,” Vulis said.

“Camec has achieved its aim of constructing assets in the DRC but has found its institutional appeal limited,” said John Meyer, head of research at Fairfax IS in London. “A cash acquisition by ENRC removes this issue and should enable the revaluation of the assets within a well established FTSE 100 company.”

Shares Gain

ENRC’s offer is a 67 percent premium to the July 15 closing price of 12 pence, the day before Camec announced it had received a preliminary approach, the statement said.

The shares have risen 63 percent since then and gained 1.25 pence, or 6.9 percent, to 19.5 pence by the close of London trading. ENRC declined 3 pence, or 0.3 percent, to 892 pence.

ENRC also agreed to buy all shares held by Dan Gertler, one of the main shareholders in Camec, Vulis said. Camec was founded by former England cricketer Philippe Edmonds.

“The quickest gain for ENRC would come from capitalizing and moving on to produce platinum in Zimbabwe and copper in Congo,” Brock Salier, an analyst at Ambrian in London, said by phone. “Camec has the best operating production site in Congo and its capacity could be raised up to 100,000 tons from the current 30,000 tons.”

Vulis declined to comment on a statement yesterday by African Minerals Ltd. that ENRC may make an offer for the company, saying he couldn’t comment on “speculation.”

To contact the reporter on this story: Firat Kayakiran in Istanbul at fkayakiran@bloomberg.net

Last Updated: September 18, 2009 12:17 EDT