Bloomberg News

Magnitogorsk Gains Most in Five Months on Flinders Bid Drop

July 03, 2012

OAO Magnitogorsk Iron & Steel (MMK) rose the most in five months as the steelmaker terminated its A$554 million ($568 million) bid for Australia’s Flinders Mines Ltd. (FMS), fuelling bets the company won’t boost spending.

The shares climbed 4.9 percent to 9.926 rubles by the close in Moscow, the biggest jump since Feb. 3.

The Russian steelmaker, known as MMK, dropped its takeover bid for the Australian mining company late yesterday after a Russian court postponed a ruling on a minority shareholder’s effort to block the takeover.

“MMK is a net beneficiary of the break up,” VTB Capital analysts led by Igor Lebedinets said in an e-mailed research note today. “The deal might have looked attractive, but the weakened earnings in 2012 have brought the increasing leverage into the spotlight.”

MMK saw its takeover offer blocked after minority investor Elena Egorova won a court decision in March preventing the deal, claiming it discriminated against her interests as a shareholder. MMK had agreed to acquire the Adelaide-based iron- ore producer in November.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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