Take the money and run was the name of a great Woody Allen movie – it is also good advice for shareholders in a company under offer to look at closely, especially when the bid is all cash.
Atlas Iron’s board are either Woody Allen fans or realists after they told shareholders to do just that yesterday.
The board switched its recommendation for shareholders to accept Hancock Prospecting’s all-cash takeover of 4.2 cents a share in cash offer in favour of its previous preference for an all-scrip deal with Mineral Resources (which valued Atlas shares at 3.2 cents).
The recommendation is subject to an independent report recommending that Hancock’s $390 million offer, is fair and reasonable and that no superior proposal emerges.
Atlas also revealed it is liable to pay MinRes a break fee of $3.12 million for changing its recommendation under its existing agreement with the company.
Mineral Resources on Wednesday dropped out of the bidding war by deciding against matching the Hancock offer.
The company would have had to lift its all scrip offer by more than 50% to match the Hancock offer and cash always beats shares, unless there is a significant capital gains tax problem and you can roll your profits forward via a share offer or alternative.
Atlas said yesterday Hancock’s offer would formally open in about two weeks’ time but told shareholders to take no action until they receive a target’s statement.
“The target’s statement will set out the Atlas board’s formal response to the Hancock offer and will include a report from an independent expert stating whether the Hancock offer is fair and reasonable to Atlas shareholders,” the company said in a statement yesterday.
The focus now turns to Fortescue Metals, which stills holds a 19.9% stake in Atlas, and has yet to reveal whether it plans to launch a rival bid for the junior miner or whether it will sell its stake into the Hancock offer. Woody Allen’s advice still stands. Atlas shares ended at 4.4 cents.
