TORONTO (miningweekly.com) – Investors in Vancouver-based MAG Silver have approved an amendment to the company's shareholder rights plan, which is aimed at protecting the company against hostile takeover bids.
MAG is currently fending off an unsolicited buyout attempt by Fresnillo plc, which announced in December that it would offer $4,54 a share in cash for the 80,2% in MAG that it did not already own.
The two companies have a joint venture (JV) on the Juanicipio deposit, in Mexico. Fresnillo owns 56% of the project and is the operator of the JV, while MAG holds the balance.
However, before Fresnillo could make its offer, MAG was required by Canadian law to conduct an independent valuation of itself, but the process fell apart after MAG put the valuation on hold, claiming Fresnillo had refused to provide the necessary information about the Juanicipio project.
The amendment approved on Tuesday allows a bidder which owns 10% or more of the voting shares of MAG, including Fresnillo, to make a 'shareholder-endorsed insider bid' without triggering the rights plan.
A shareholder-endorsed insider bid is a takeover bid by an insider that a majority of independent shareholders have endorsed by tendering their shares and which meets certain other criteria.
The change to the shareholder rights plan gives shareholders the ability to decide whether or not to tender for Fresnillo's proposed offer “through a process that is fair and not coercive”, MAG said in a statement.
MAG's management and board have dubbed Fresnillo's proposed offer a "take-under" because the offer was lower than MAG's closing share price on the day before the announcement, of C$4,96 a share.