Electroputere shares increased from RON 0.24/per share lei on June 11, when state representatives announced the selection of Al Arrab Contracting Company for the final takeover negotiation phase, to RON 1.47/per share, which means that the company's market value rose 6.6 times to some €57.59 million. Brokers say that rumors that the Arab investor plans to make an offer to take over Electroputere at RON 3/ per share - almost twice its current price and 12 times higher than the price before the privatization announcement, have led to the spectacular increase.
"This rumor has been circulating on the market for several days now, and if we were to take such unusual increases into consideration, this would mean that there are investors who are better informed, and this would not be fair for the remaining players on the market," a BSE broker said.
No other company listed on the Bucharest Stock Exchange has ever experienced such a rise. Even Rompetrol Refinery and Petrom shares registered no such increase in value when their privatization was announced in 2004. Rompetrol Rafinare Constanta shares rose a daily 14 percent in the first three days of listing.
"There are increasing reasons for suspicions, and we believe that some people are better informed. In just 13 days, Electroputere's value increased more than it has since its listing, and this evolution comes within the context of growing liquidity," explains Mihai Chisu, Egnatia Securities broker. According to estimates by various brokers, the company is currently undervaluated, but even so the increase is unexplainable. "We have seen increases following announcements of privatization, but this is far too much and too sudden, considering that the contract is not yet signed and the clauses are as yet unknown," said Adrian Simionescu, Finans Securities Manager. At present AVAS holds 65.83 percent of Electroputere Craiova's shares (a package to be sold to Al Arrab), while Broadhurst Investment Ltd. and Lindsell Enterprises together own a further 5.58 percent of the company.
