PERTH (miningweekly.com) – Base metals producer Eramet has launched an off market takeover offer for joint venture (JV) partner Mineral Deposits Limited (MDL).
Eramet, which holds a 50% interest in the TiZir titanium and iron JV, in Norway, was offering MDL shareholders A$1.46 a share in cash for their holding in the ASX-listed company.
The offer valued MDL at A$291-million.
Eramet noted that the takeover offer presented a premium of 26% to MDL’s last closing share price, and a 33% premium to the company’s one-month volume weighted average share price.
The JV partner also noted that the offer provided MDL shareholders with cash certainty, compared with the uncertainty of remaining an MDL shareholder given the volatility of the mineral sands market, TiZir’s high financial leverage, and MDL’s limited trading liquidity.
Furthermore, Eramet pointed out that MDL had not reported an annual net profit in over five years, and has not paid a dividend since it started trading on the ASX in 1999.
“We are convinced that our offer is a unique opportunity for MDL shareholders. The offer provides certainty of value at a genuinely attractive cash price from MDL shares,” said Eramet CEO and chairperson, Christel Bories.
“For Eramet, this is a logical step in line with the group’s strategy, that consolidates the ownership of the TiZir asset within its portfolio at a time when the group has improved financial flexibility. Given the nature of TiZir and the mineral sands industry, we believe that the TiZir asset would be best placed being wholly-owned within a larger, diversified portfolio such as Eramet’s. It is the right move done at the right time,” she said.
The directors of MD have urged shareholders not to take any action, labeling the offer ‘highly opportunistic’.
“It takes advantage of sharply improving commodity prices and improved operational and financing performances of the TiZir JV. In doing so, the offer denies MDL shareholders the opportunity to realise what MDL considers to be the true value of their investment,” the ASX-listed company said.
“That Eramet, a partially French government-owned corporation and trusted JV partner in TiZir, did not approach MDL before announcing its offer and has elected to pursue a hostile transaction supports MDL’s view of the opportunistic nature of this offer,” the company added.
Eramet has already acquired a 13.3% interest in MDL from key institutional shareholders, including the outright acquisition of an 8% interest at the same price as the offer price, and the execution of a pre-bid acceptance agreement.
The takeover offer was subject to a number of conditions, including a minimum 50.01% acceptance condition and the approval of the Australian Foreign Investment Review Board, which has already been received.