Shares in Bumi PLC (BUMI) surged by over 40 per cent on news that the Bakrie Group has offered to sever its links with the controversial mining group in exchange for the Indonesian assets it brought on board in a deal struck in November 2010. At 260p, Bumi shares are now trading back on a slight discount to Liberum Capital's previous sum-of-the-parts valuation of 273p.
Under the proposals, the Bakrie Group would exchange its 24 per cent stake in Bumi for around a third of the 29 per cent stake in PT Bumi Resources held by the London-listed entity. The Bakries then propose to buy back the remaining shares in PT Bumi Resources for $278m (£173m) before Christmas this year. In addition, the Bakrie Group made a conditional offer to buy out Bumi's 85 per cent stake in PT Berau Coal Energy for $946m before the end of June next year.
If the proposed deal is accepted, Bumi would effectively revert to its previous status as a cash shell, potentially worth a total of $1.29bn. The Bakries are hoping that Vallar/Bumi founder, Nat Rothschild, will return the ‘B’ shares that were awarded to him as an incentive for helping to secure the Bakrie family interests and which account for 6.6 per cent of Bumi’s share capital. According to analysts at Barclays, assuming all the above deals take place then Bumi shares would be worth 483p, or 440p if Nat Rothschild refuses to cancel his shares.
