HISTORIC RISE FOR A ROMANIAN STOCK "Azomureş" rose 40% in one day

• Ameropa Holding may indirectly take over the plant

• Brokers say that the interest in AZO is justified

Shares of "Azomureş" Târgu Mureş (symbol: AZO) yesterday gained 39.9%, reaching 1.1780 lei/share, this being the biggest daily rise of a stock ever recorded in a single trading session on the Bucharest Stock Exchange.

Yesterday, the BSE was forced to gradually raise the maximum fluctuation limit from the usual level of 15%, to 25%, then to 35% and finally to 40%, a threshold which has never been imposed before, amid a high buying pressure. Turnover in AZO trades amounted to 2.7 million lei, far above the average daily turnover of 264,000 lei.

The fantastic rise came after the issuer announced on the stock exchange that its shareholders, "Eurofert Investments" and "Azomureş Holdings", which together own 75.87% of the chemical plant, may be acquired by Swiss group "Ameropa", with talks on the matter being at a "relatively advanced" stage.

Brokers consider that "Azomureş" has attractive financial ratios, and the stock is currently undervalued.

"Azomureş has confirmed the fact that the shareholders of Eurofert and Azomures Holdings (ed. note: AH) are currently engaged in negotiations with the Ameropa group of companies, negotiations which are currently at a relatively advanced stage, which may or may not result in the Ameropa Group taking control of Eurofert and AH. Negotiations are ongoing and it needs to be mentioned that such a takeover is conditioned by the approval of «economic concentration » (this being a suspensive condition for the completion of the transaction)", the press release sent by Azomureş to the Bucharest Stock Exchange on Monday says.

If Ameropa will indirectly acquire a controlling interest in Azomureş, it may be forced to make a public takeover bid, since it would exceed the 33% threshold where it must launch such an offer.

• Simion Tihon: "AZO - one of the cheapest companies listed on the Bucharest Stock Exchange"

"Following the press release concerning the discussions between Ameropa and the shareholders of Azomureş, a strong rise in the price was to be expected", said Simion Tihon, broker at "Prime Transaction". According to him, the speed of the rise, as well as the increase in trading turnover, demonstrate that interest in the stock of the chemical plant is justified. "If a deal were reached between the shareholders of Azomureş and Ameropa, it is hard to believe they would sell at the current price", he said, and he added: "Azomureş currently has very attractive financial ratios, and the financial results for the first two quarters of the year also contribute to the gains the stock posted today (ed. note: yesterday). Unlike Oltchim, where speculators" emotions lead to sudden rises and drops, the rise in Azomureş has a fundamental explanation. I do not rule out the possibility of a takeover bid, but it is currently hard to estimate what the right time would be for that.

Based on Friday"s close, Azomureş had a P/E (ed. note: price earnings ratio - a valuation ratio of a company's current share price compared to its per-share earnings.) of 1.78, and a P/BV (ed. note: price/book value) of 0.49. So we can tell that based on these two indicators, we can say that it is one of the cheapest companies listed on the BSE".

Buying pressure was obvious throughout the entire trading session, most of the trades being performed at the maximum price of the session, said Nicu Grigoraş, broker at "Intercapital Invest". According to him, investors" reaction can be explained by the extremely attractive ratios, in the event of a potential takeover bid: "Unfortunately, in such cases, where changes in the ownership of a listed company occur indirectly (where it is not the stock of the listed company which is acquired, but rather that of its shareholders) domestic legislation is unclear. In the coming days, there should be clarifications on the legislation applicable in this case, and on whether the shareholders of Azomureş will complete the negotiations announced in today"s press release (ed. note: yesterday). What the buyer intends to do with the shares of AZO is also important".

• Ameropa has acquired an additional 0.49% of Ameropa Grains Constanţa, in a takeover bid

In Romania, "Ameropa" owns "Ameropa Grains" Constanţa (CCRL), the former "Comcereal" Constanţa, which took on the name of its majority shareholder. "Ameropa Holding", which owned 96% of the shares of Ameropa Grains, performed a takeover bid for the outstanding shares of CCRL, which ended yesterday. Ameropa succeeded in acquiring 39,568 shares, (0.49% of the company), in exchange for a price of 5.5 lei/share.

"Ameropa" intended to list the company on the Rasdaq market. The total value of the "Ameropa" offering was 1.73 million lei (400,000 Euros) and values the company at 10 million Euros.

"Azomureş" directly owns 90.42% of the shares of port operator "Chimpex" Constanţa (CHEM).

The plant of Târgu Mureş is controlled by six investors, through Eurofert Investments and Azomureş Holdings LLC, both registered in the USA.

In the first six months of the year, the company"s turnover rose 61%, from 541 million lei to 873 million lei, whereas the profit increased 2.3 times, from 68.8 million lei to 163.2 million lei.