So will the oddly-priced takeout offer for Yancoal Australia from its Chinese parent Yankuang happen?
In documents filed with the Hong Kong stock exchange, Yankuang said it was considering a $US3.60 ($A5.07) a share bid for Yancoal, to be satisfied through the issuance of convertible bonds.
This would potentially result in Yancoal’s delisting from the Hong Kong stock exchange and/or the ASX.
The use of convertible bonds will not make the bid attractive to Australian investors who would prefer cash, or at worst, ordinary shares in the bidding company or a new vehicle (and with a stockmarket quotation).
The Yancoal annual meeting yesterday in Sydney did not see much support for the odd offer from shareholders or the management and independent board members.
Attempts by Glencore to convince Yancoal’s Chinese major shareholder to buy its stake in the ASX-listed miner on multiple occasions over the past five years are reported to have been why the Chinese parent has decided to launch a cheap as chips privatisation takeover offer.
Media reports on Monday suggest the cheap bid was an attempt to get Glencore to put up or shut up by offering it an exit deal for its 6% in Yancoal Australia (YAL).
The $2.5 billion takeover bid was priced at a 16% discount to the last price for Yancoal shares of $6.07. YAL shares dropped more than 7% on Monday to end at $5.62.
The price discount was a puzzle to analysts as was the use of convertible bonds.
Yankuang already owns 62.3% of Yancoal (it in turn is owned by the huge Shandong Energy Company, which is state-owned in the Chinese province of Shandong), while China Cinda Asset Management owns about 15.9%. (China Cinda was founded as a state-owned enterprise and a bad bank for China Construction Bank in 1999).
The remaining 14% to 15% are held by local and other shareholders.
Around 498.2-million shares are not owned by Yankuang (including those owned by China Cinda, Glencore and non-affiliated shareholders).
“The Yancoal board has appointed an independent board committee (IBC) to evaluate and respond to the potential transaction and, to the extent required, to make a recommendation to the independent shareholders of Yancoal,” the company said in a statement on Monday.
“The IBC comprises all non-executive directors who do not have any direct or indirect interest in the potential transaction, other than as a Yancoal shareholder. Yancoal said the IBC had engaged with Yankuang to clarify the proposal.”
“Since its establishment, the IBC has corresponded with Yankuang Energy seeking clarifications and additional information in relation to the potential transaction, including to better understand how Yankuang Energy has assessed the value of Yancoal,” Yancoal said.
In documents filed with the Hong Kong stock exchange, late last week and the ASX on Monday Yankuang said it was considering a $US3.60 ($A5.07) a share bid for Yancoal, to be satisfied through the issuance of convertible bonds.
This could end up in Yancoal’s delisting from the Hong Kong stock exchange and/or the ASX.
There is of course Foreign Investment Review Board approval to be gained as well.
