Renova Group, the investment vehicle of Viktor Vekselberg, triggered a public tender offer for the rest of Sulzer AG after boosting its stake beyond the one-third mark, raising speculation of future share buybacks.
Renova is offering the minimum price required by law for the shares and has no intention to take Sulzer private, it said in a statement. The move gives Renova greater flexibility and increases the likelihood of future share repurchases, said Vontobel analyst Fabian Haecki, who rates the stock hold.
Renova will now be able to build its holding significantly above one third without making any additional disclosures, Helvea Baader Bank Group analyst Stefan Gaechter said in a note. Under the Stock Exchange Act, the next mandatory offer would come once they cross the 50 percent threshold, according to the SIX Swiss Exchange in Zurich.
“Renova did this to avoid having to make a higher offer to all shareholders were Sulzer to announce a share buyback program,” Vontobel’s Haecki said. “The share price at the moment is low and the timing was ideal.”
Shares in Sulzer jumped almost 4 percent to trade at 103 Swiss francs a share by 9:45 a.m. in Zurich. The company has a market value of 3.55 billion francs ($3.66 billion). Helvea analyst Gaechter has a hold rating on the stock.
Tiwel Holding AG, Liwet Holding AG, JSC Metkombank and Lamesa Holding SA -- all Renova units -- disclosed its stake of 33.36 percent on July 31. It’s now offering 99.20 francs a share for the rest of the company, UBS AG said in a prospectus.
Sulzer said in a statement an independent committee will review the offer and publish a report no later than Aug. 24. Sulzer Chairman Peter Löscher, who is also chief executive officer of Renova Group and the former Siemens AG chief, won’t be part of the committee. A spokesman for Sulzer declined to comment further on the statement.
“The mandatory tender offer that Renova is making today to all shareholders of Sulzer AG confirms its long-term commitment to Sulzer and to the company’s current strategic focus,´´ Renova said in a statement Monday.
The period for tendering shares is expected to run from Aug. 18 to Sept. 14, with an extension period planned for Sept. 21 to Oct. 2, Renova said.
Vekselberg also owns nearly 43 percent of Swiss industrial equipment maker OC Oerlikon.