Rejection spurs firm into acting hostilely
By Richard Fu |
October 24, 2012, Wednesday
|
Print Edition
Print Edition
A Shanghai-based private equity firm has launched a hostile A$830 million (US$854 million) takeover bid for Australia's Discovery Metals Ltd, after an initial offer was rejected.
Cathay Fortune Corp and its partner China-Africa Development Fund announced yesterday that through a 75-25 joint venture they would bypass Discovery Metals' board and present the offer of A$1.70 per share directly to the shareholders of the Africa-focused copper miner.
The Chinese consortium, which already owns 13.8 percent of Discovery Metals, first presented the offer to Discovery's board on September 21 but was refused access to due diligence and further engagement ''without any reasonable basis,'' said Yu Yong, founder and the largest shareholder of Cathay Fortune, in a statement.
The cash offer of A$1.70 a share was 51 percent above the volume weighted average price of Discovery for the 30 trading days through October 3, the last day before the indicative proposal was made public.
Discovery shares closed above the offer price yesterday after the hostile bid, jumping 4.85 percent to A$1.73.
"Our offer represents compelling and certain value at an attractive premium, at a time when there is significant uncertainty over the current and expected cash costs and mine expansion plans of the Boseto Copper Project," Yu said.
The Boseto project in Botswana, Discovery's key asset, was recently commissioned to produce 36,000 tons of copper and 1.1 million ounces of silver per year.
Analysts at Foster Stockbroking Pty Ltd have said the offer "appears compelling and fairly valued."
Cathay Fortune Corp and its partner China-Africa Development Fund announced yesterday that through a 75-25 joint venture they would bypass Discovery Metals' board and present the offer of A$1.70 per share directly to the shareholders of the Africa-focused copper miner.
The Chinese consortium, which already owns 13.8 percent of Discovery Metals, first presented the offer to Discovery's board on September 21 but was refused access to due diligence and further engagement ''without any reasonable basis,'' said Yu Yong, founder and the largest shareholder of Cathay Fortune, in a statement.
The cash offer of A$1.70 a share was 51 percent above the volume weighted average price of Discovery for the 30 trading days through October 3, the last day before the indicative proposal was made public.
Discovery shares closed above the offer price yesterday after the hostile bid, jumping 4.85 percent to A$1.73.
"Our offer represents compelling and certain value at an attractive premium, at a time when there is significant uncertainty over the current and expected cash costs and mine expansion plans of the Boseto Copper Project," Yu said.
The Boseto project in Botswana, Discovery's key asset, was recently commissioned to produce 36,000 tons of copper and 1.1 million ounces of silver per year.
Analysts at Foster Stockbroking Pty Ltd have said the offer "appears compelling and fairly valued."
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