Billionaire Eike Batista, Brazil’s richest person, is bolstering investor confidence in his empire of energy and commodities companies by offering to buy back all outstanding shares of ports developer LLX Logistica SA. (LLXL3)
Batista will pay as much as 618.7 million reais ($303.1 million) to delist Rio de Janeiro-based LLX after the company’s stock plunged to a three-year low last month, according to a regulatory filing yesterday. The per-share offer of 3.13 reais represents a 9.8 percent premium over the previous session’s closing price.
The proposal is a reversal for Batista, who took public six energy, commodities and logistics startups since 2006. Batista, who as recently as March said he planned to issue shares in two more units, saw his personal fortune fall by $1.2 billion this year after his oil company, OGX Petroleo & Gas Participacoes SA, reduced output and reserve estimates.
“It is better now for Eike to put his money where his mouth is, as credibility has dropped,” said Laurence Balter, who oversees $100 million for Fox Island, Washington-based Oracle Investment Research, including OGX shares. “The market is very irrational right now, and this is a good price for a very valuable and important port for Brazil,” he said by e- mail.
Shares of Batista’s companies tumbled in June after OGX cut production targets at its first two oil wells by as much as 75 percent. The drop dragged down Batista’s mining, logistics and shipbuilding companies on concern the enterprises, some of which rely on OGX for revenue, will scale back targets as well.
Batista, 55, is worth $21.3 billion, making him the world’s 22nd richest person, according to the Bloomberg Billionaires Index daily ranking. The billionaire’s wealth peaked at $34.5 billion on March 27.
LLX, which is building the Acu industrial port complex in Rio de Janeiro state, gained 3.9 percent after yesterday’s announcement to 2.96 reais in Sao Paulo, the highest since May 14. Before today, the stock lost 32 percent in the past 12 months, more than the 2.7 percent decline for the Brazilian benchmark Bovespa index.
Batista’s offer of 3.13 reais apiece trails JPMorgan Chase & Co.’s target price of 5.40 reais and likely doesn’t reflect the full value of the Acu port project, analysts Fernando Abdalla and Ricardo Rezende said in a note to customers yesterday.
“We would not be surprised if minorities question the suggested price,” the analysts said. The offer “seems low if compared with our valuation model.”
The analysts declined to comment further through JPMorgan’s press office in New York.
EBX Group Co., the holding company for most of Batista’s assets, declined to elaborate on yesterday’s filing, as did LLX’s press office in Rio.
Batista has said Acu will become the largest port in the Americas with capacity to handle 350 million metric tons a year, including iron ore, oil and steel products. LLX, which has signed contracts with companies including Anglo American Plc, Subsea 7 SA and Technip SA, is negotiating 60 possible agreements with firms seeking to do business at the port’s industrial complex, according to the company’s website.
The Ontario Teachers’ Pension Plan, LLX’s largest shareholder after Batista, agreed to boost its stake in the company as part of the offer announced yesterday, according to the filing. Deborah Allan, a spokeswoman for Ontario Teachers’ in Toronto, declined to comment.
Banco BTG Pactual SA, Bank of America Corp. and Banco Santander SA were hired to assess the value of the shares, LLX said.
Batista’s offer will help bolster confidence in the LLX projects because the billionaire is increasing his stake in the company, said Victor Mizusaki, an equity analyst at UBS AG.
“He is putting more money in the company,” Mizusaki said in a telephone interview from Sao Paulo yesterday. “We can see that the projects are evolving.”
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