LONDON — Eurasian Natural Resources Corporation (ENRC), the metals producer being investigated by the UK’s Serious Fraud Office, has rejected a bid of about $4.8bn to take the company private from three founding shareholders and the Kazakh government.

ENRC recently returned to the spotlight after a report by former United Nations secretary-general Kofi Annan’s Africa Progress Panel on May 10 criticised the embattled FTSE 100 miner for "opaque concessions trading costing the Democratic Republic of Congo $725m".

The independent committee set up by ENRC’s board to evaluate the $4.8bn proposal said on Friday the offer "materially undervalues" the company. The bid is 7.5% more than ENRC’s closing price on April 18, the day before the group said it might make an offer. The shares dropped 8% to 271.6p in London. The group made a 247p-a-share proposal comprising cash and shares of Kazakhmys, which mines copper in Kazakhstan, according to people familiar with the matter who asked not to be identified because the information is not public.

The UK’s Panel on Takeovers and Mergers agreed on Friday to extend to June 3 the deadline by which the group must either improve its offer or walk away, according to reports.

The three ENRC founders — Alexander Machkevitch, Patokh Chodiev and Alijan Ibragimov — are seeking to take the company off the market five years after it sold shares in an initial offering in London.

The Serious Fraud Office (SFO) said on April 25 it had begun its investigation over allegations of fraud, bribery and corruption relating to the company’s activities in Kazakhstan and Africa. ENRC said two weeks later that Deutsche Bank and Morgan Stanley had quit as advisers.

ENRC mines iron ore, produces ferroalloys used in steel making, generates power in Kazakhstan and mines metals in Africa. In 2010, it took control of copper and cobalt mines that Israeli billionaire Dan Gertler had acquired from Congo.

The Congolese government had previously seized the assets from Vancouver-based mining company First Quantum Minerals.

Mr Annan’s report in the Financial Times calculates Congo incurred losses of $1.36bn between 2010 and 2012 as aresult of alleged undervaluation of state assets in five mining deals, three of which involve ENRC — involving lost income of $725m. The total figure represented a "small share" of losses as state-owned companies underpriced assets that they sold to companies owned by Mr Gertler between 2010 and 2012, the panel said.

Reports said the UK’s SFO was sending investigators to Congo as part of a criminal investigation.

Anti-corruption groups including Global Witness have criticised ENRC for buying the assets, saying Mr Gertler got them at low prices because of his close relationship with Congo President Joseph Kabila. Mr Gertler denies he purchased companies at below-market rates.

The founders were raising $1.6bn to fund the buyout, the people said. The government was offering its 26% stake in London-based Kazakhmys, comprising the 15% it holds directly and an 11% stake belonging to Kazakh wealth fund Samruk-Kazyna, the people said.

Kazakhmys holds a 26% stake in ENRC. As part of the bidding group’s proposal, the copper producer will be offered $885m and 77-million of its own shares for its ENRC shareholding, the people said.

Spokesmen for the bidding group, ENRC and the independent committee of directors declined to comment on the offer price. No one at Samruk-Kazyna could be reached for comment.

Mehmet Dalman resigned as chairman of ENRC on April 23 and was replaced by director Gerhard Ammann, the former CEO of Deloitte & Touche’s Swiss practice.

ENRC appointed Mr Dalman as chairman in February 2012 to oversee a reorganisation and improve corporate governance after corruption allegations against the company. Mr Dalman said at the time he stepped down that he had "achieved all that I can as chairman".

First Quantum sued ENRC, which settled in January 2012 and agreed to pay $1.25bn for First Quantum’s share of the mining assets. Credit Suisse and Lazard are advising the committee of ENRC directors.

Bloomberg