Gold and copper miner PanAust (PNA) has rejected a state-owned Chinese company’s $1.1 billion takeover bid, despite it being much lower than the first bid last year. The rejection is likely to see the bid turn hostile.
PanAust’s board told the ASX in a statement yesterday that the $1.71 a share bid was not high enough, while its share price and copper and gold prices are currently trading at five year lows and the medium to long term outlook for copper is strong.
Guangdong Rising Assets Management (GRAM) already holds a 22.5% stake in the Laos-focused miner and made a $2.30 a share, $1.5 billion bid in 2014.
GRAM has since scooped up a further 10.58 million shares, increasing its holding to 24.1%.
Despite the strong position of the Chinese shareholder, PanAust’s rejection is a brave one – it could force its biggest shareholder to lift the offer, or as a last resort, go ‘hostile’. That seems likely as media reports say GRAM plans to appeal directly to PanAust’s shareholders ands bypass the board.
PanAust shares closed little changed yesterday at $1.735, probably for that reason.
PNA 1Y – PanAust bid to turn hostile?
The $1.71 offer was 40% higher than the volume weighted average price for PanAust shares when it was made in late March but is 26% under the 2014 offer.
The PanAust board said in its statement yesterday, "When faced with any takeover offer, PanAust shareholders should expect the offer price to fairly reflect this longterm value potential," PanAust managing director Fred Hess said in the statement. "We believe GRAM’s current offer price falls short of this level."
The PanAust board has advised shareholders to take no action in response to the offer but that it remains open to engaging with GRAM to "determine whether a mutually acceptable offer price can be agreed".
“While we believe the current offer is inadequate, we are open to engagement and to considering all proposals which we believe are in the best interests of our shareholders,” PanAust chairman Garry Hounsell said in yesterday’s statement.
The board said in yesterday’s statement the full details and reasons for this recommendation will be set out in PanAust’s Target’s Statement (including the Independent Experts Report) which will be dispatched to PanAust shareholders on or about 30 April 2015.
