Following the launch of a corruption probe in the UK involving a natural resources giant with strong links to Kazakhstan, the company, ENRC, has become the subject of a hostile takeover bid by powerful interests with connections to the Central Asian state.

The three oligarchs who founded the London-listed Eurasian Natural Resources Corporation – Alexander Machkevitch, Patokh Chodiev and Alijan Ibragimov (who are all believed to have powerful connections in Kazakhstan) – have teamed up with the Kazakh government to mount the takeover. Together the four parties hold a combined 55.33 percent of ENRC, with the three founders owning equal shares of 14.56 percent each and Astana owning 11.65 percent. 
ENRC’s committee of independent directors has rejected the bid on the grounds that it “materially undervalues ENRC,” according to a May 17 statement. 
The committee said that the City of London’s Panel on Takeovers and Mergers, which regulates takeover bids for London Stock Exchange-listed firms, had granted its request for an extension until June 3 for a decision on the bid, to allow the consortium time to make a better offer – something there is no guarantee it will do.
The takeover panel issued a statement on May 20 saying that another London-listed company linked to Kazakhstan, the Kazakhmys copper miner, is officially to be treated as part of the takeover bid, because Astana plans to use its stake in Kazakhmys to finance the ENRC buyout. 
For each ENRC share, the consortium is offering 175 pence sterling in cash ($2.60) and 0.231 of a Kazakhmys share – far below the price at which ENRC floated nearly five years ago: “ENRC floated at 540p in late 2007,” London’s The Independent reported. “Yesterday’s indicated takeover offer is worth 255p, made up of 175p in cash and 80p worth of Kazakhmys shares.” 
Analysts have linked the takeover bid to a series of upsets at ENRC, which last month became the target of a UK fraud probe into its operations in Kazakhstan and Africa. Walking away from its London listing would reduce scrutiny on operations, the thinking goes.
Amid the controversy ENRC Chairman Mehmet Dalman resigned on April 23, two years after another game of boardroom musical chairs in which chairman Sir Richard Sykes and independent director Ken Olisa were ousted, leading Olisa to dub the corporate culture at ENRC “more Soviet than City [of London].” 
ENRC’s share price is on the slide; last year it suffered pre-tax losses of $550 million and paid no final dividend to shareholders.
Against this troubled background, analysts told the Financial Times that the Kazakh consortium was in a strong position. The minority shareholders whom the oligarchs are seeking to buy out “have very limited leverage,” said Alon Olsha of Macquarie.