Pharmstandard is a Russian pharmaceutical company that is controlled by Victor Kharitonin. He is trying to take the company private (after IPO’ing it in 2007), and to make this happen Augment Investments has launched a tender offer for the GDRs that trade in London. The company is offering US$5.50/GDR while these last traded at US$5.31 for a spread of 3.6%. That doesn’t sound like a whole lot, but with the tender offer expiring at the end of next week the potential IRR is pretty high. If we assume that it takes another week before payment is made the IRR is would be ~150%. With Augment Investments waiving the 50% minimum acceptance condition this appears to be a low-risk transaction, although there is some amount of unquantifiable random Russian risk: you never know if all parties continue to play by the rules.
In addition to this the full tender offer memorandum is nowhere to be found online, and the company has so far not responded to my request to provide it. So perhaps I’m missing something that everybody else knowns… Despite that, I think buying a couple of shares and tendering them is a decent bet. Otherwise, I’m hoping I have a smart reader that knows more!
Author is long Pharmstandard