PERTH (miningweekly.com) – The board of ASX-listed Aditya Birla has been accused of failing to release market sensitive information to its shareholders, after it came to light that fellow listed Metals X had in May approached the company for a possible takeover.

Metals X last week formally announced plans for an offmarket takeover of Aditya Birla, offering shareholders one of its own shares for every five Aditya Birla shares held, valuing the company’s shares at 24.7c each.

However, Metals X pointed out that it had initially written to Aditya Birla to start merger discussions in May, but had been unable to initiate any engagements with the embattled copper miner.

John Spalvins, chairperson of Galufo, a minority shareholder in Aditya Birla, said in an open letter to the company’s directors that by not disclosing market sensitive information to the ASX, the company had created a “false market” to exist for Aditya Birla shares.

“Metals X was unable to initiate any engagement with Aditya Birla but Aditya failed to advise its shareholders and the market of this merger approach.

“Aditya’s ‘silence’ continues the company’s policy of recent times, including its Perth annual general meeting on August 19, when I sought information as to whether Aditya directors had received any approaches that may lead to a takeover.

“Even though I questioned Aditya at length on this issue, my questions were brushed aside,” he stated.

Spalvins further said Aditya’s chairperson and board had for years declined to deal with issues raised by the company’s minority shareholders, including the composition of the board, the continued decline of the company’s share price since 2006, the failure of management to control mining costs and its inability to minimise mining interruptions and foresee required investments to prevent the losses that have resulted.

“Given the current situation and, even though I believe the proposed Metals X bid significantly undervalues the real worth of Aditya Birla, it is essential that the company’s board facilitates the flow of relevant information to enable the bid to proceed and as far as possible ensure that Aditya Birla does not breach the conditions which the offer contains, with a view of negotiating a higher price,” he noted.

“Alternatively, as previously suggested, Aditya’s controlling shareholder, Hindalco, should make a ‘fair offer’ based on the net assets of Aditya. It is essential that minority shareholders in Aditya be given the opportunity to exit an investment that has been disastrous and is illiquid.”

Metals X’s offer for Aditya was subject to a number of conditions, including a 90% acceptance condition. The suitor noted that Hindalco, which holds a 51% interest in Aditya, would have to accept the offer for the remaining shareholders to also accept the offer.