Bradken (BKN) yesterday confirmed that it had been formally told by would-be suitors – the consortium of Chile’s Sigdo Koppers and CHAMP Private Equity – that merger talks have been officially terminated.
Bradken effectively ended the chances of a deal on August 31 when it told the two companies it would not agree to an extension of a 60 day negotiating period. That was followed by formal notice from the duo, as Bradken told the ASX yesterday.
"Bradken announced today that it has received written notice from a consortium of Sigdo Koppers and CHAMP Private Equity formally terminating merger discussions between the Maggotteaux Group and Bradken.”
Surprisingly the shares jumped nearly 3% in early trading (on a day when the market was up and down in volatile conditions) yesterday to $1.22 as investors punted on renewed interest for Bradken. But they dipped late in the day to end down 2% at $1.16.
BKN 1Y – Bradken deal axed
In fact brokers reckon the consortium – Sigdo Koppers and CHAMP – remain interested in Bradken, which has been hit hard by a sharp downturn in the mining industry, because they pumped $70 million (in redeemable convertible preference shares) into Bradken’s weak balance sheet in June this year.
The 60-day exclusivity period (for the consortium to be the only bidders) started when the $70 million balance sheet injection was made.
Analysts say that an official termination date of the merger talks is important for the operation of the redeemable convertible preference shares because a deadline for their conversion has now been set.
Bradken said yesterday that the conversion period expires on December 31, 2016. The redeemable convertible preference shares will act as a “poison pill” for any other would-be bidder.
Over the past 13 months Bradken has had two separate buyout proposals from a separate private equity firm, Pacific Equity Partners, with two different partners. The latest one was pitched at $2.50 per share in early April but was rejected by the Bradken board.
