Mining ranked first in M&A momentum in Russia in November

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AK&M 30 December 2020 22:02

The mining sector took the lead in the M&A momentum among Russian industries in November 2020 with just one transaction outstripping all other transactions of the reporting period in size: Fortiana Holdings beneficially owned by businessman Vladislav Sviblov, completed the acquisition of UK-based gold mining company Highland Gold, the owner of five gold mines in Russia, for $1.45 billion. The asset was sold by Roman Abramovich, his partners and British shareholders. This transaction accounted for 61.7% of the market, according to the recent issue of AK&M Information Agency's MERGERS AND ACQUISITIONS MARKET monthly bulletin.

Highland Gold was acquired in several stages. In July, Fortiana Holdings purchased 23.95% of the gold miner's shares at a price of GBP 3 per share and acquired another 16.11% in September buying all the shares owned by Roman Abramovich, Evgeny Shvidler and their partners which brought its stake to 40.06%. After that, Fortiana offered to acquire the remaining shares from the minority shareholders at the same price of at least GPB 3 per share. On November 19 when the offer expired Fortiana announced consolidation of 342.1 million (94.02%) of Highland Gold Mining's shares. Fortiana then announced a squeeze-out for the remaining 5.98% of the shares, expected to be completed by January 2021. The cost of the 100% package is GBP 1,087.7 million ($1,449.7 million).

Construction and development ranked second among the Russian industries in November 2020 with 17 transactions totaling $373.9 million, which is 3.6 times below the result achieved in November 2019. The sector accounted for 45.9% of the number of transactions, 15.9% of the M&A market volume. The largest transaction of the reporting period was the acquisition by Professional Logistics Technologies (PLT) of storage facilities with an area of about 155,000 square meters at the Landmark West logistics complex (under construction) for an estimated amount of $81.9 million.

The fuel and energy sector ranked third November accounting for 6.1% of the M&A market volume with two transactions totaling $144.3 million – for reference, not a single deal hit the market in the sector in November 2019. The largest transaction of the month was the purchase by ex-State Duma deputy Vitaly Yuzhilin and of Pechora LNG LLC from Alltech Group for an estimated amount of $100 million, the second largest transaction of the period.

The services sector ranked fourth with two transactions amounting to $123.6 million (5.3% of the market volume), which is 12.3 times above the previous year's November result. The largest transaction in November was the purchase by Alexander Klyachin's Azimut Hotels chain of 19 sanatoriums from Russian Railways holding for $88 million (this transaction ranked third in size among the November deals.

The IT sector rounds out the top 5 (4.6% of the M&A market volume) with six transactions worth $109.1 million, which is 28 times below the November 2019 result ($3.06 billion). The largest transaction of this period was the purchase by HeadHunter Group of the Zarplata.ru job search website for $46.1 million.

Not a single M&A event was registered in the once highly M&A-active sectors such as transport and food processing in November 2020.

More details on the M&A market results in November 2020 are available in issue 273 of AK&M Information Agency's MERGERS AND ACQUISITIONS MARKET monthly bulletin.

All bulletins of AK&M Information Agency are available on the AK&M Research Bulletin Store.