PERTH (miningweekly.com) – Takeover target Universal Coal has raised a number of concerns regarding a takeover offer from ASX-listed TerraCom.
TerraCom earlier this week officially launched its 33.5c-a-share offer for each Universal share held, consisting of 10c in cash and 0.6026 new TerraCom shares.
Following a preliminary review of the offer, Universal on Friday told shareholders that the company had identified significant issues which should concern shareholders, including that shareholders were not being treated in an equal manner, and not being afforded sufficient time and information to make an informed decision.
Universal said that it was also unclear whether TerraCom would be able to fulfill the cash component of the unsolicited bid.
Universal told shareholders that the issues identified offended certain principles of the UK City Code on Takeovers and Mergers, which would be relevant to the company, adding that the bid committee was actively considering the extent to which the bid breached these provisions, and whether Universal would be entitled to apply for certain sanctions to TerraCom, including suspending the voting rights to any Universal shares held by TerraCom, and to be acquired under the unsolicited bid.
Universal also reiterated that the offer consideration could significantly undervalue the company, based on the recent premia paid in control transactions for ASX-listed companies, and that the offer consideration had a significantly lower cash component than a November share purchase by TerraCom of Universal shares.
Universal again urged shareholders not to take any action regarding the takeover offer.