Emerald facing challenges to Bullseye bid

10th January 2022 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) – The merger agreement between unlisted Bullseye Mining and fellow listed Emerald Resources has been called into question, with Hongkong Xinhe International Investment Company turning to the Australian Takeovers panel to halt the bid.

Emerald Resources in December announced a takeover offer for Bullseye, under which Bullseye shareholders will receive one new Emerald share for every 3.43 Bullseye shares held. The offer values Bullseye at approximately A$117-million or A$0.30 a share, based on Emerald’s 30-day volume weighted average share price of A$1.03 a share on November 26.

The offer has been unanimously recommended by the directors of Bullseye, who have also agreed to accept the offer in the absence of a superior proposal.

In its application to the Takeovers Panel, Hongkong Xinhe noted that the two companies had been in merger discussions since May of last year, and on November 29 had entered into a bid implementation agreement.

Between November 29 and December 3, Bullseye issued more than 71.6-million shares, at prices between 20c and 27c each. On December 13, the company also issued 17.2-million shares at a price of 23c each, and 17.3-million shares at a price of 25c each.

Meanwhile, Emerald had acquired a 19.45% stake in Bullseye as a pre-bid stake from existing shareholders, on the same terms as under the offer, and on December 28, had amassed a relevant interest of 46.09% in Bullseye.

Hongkong Xinhe is claiming that both the bidder and target’s statements were deficient, and prevented Bullseye shareholders from making a properly informed decision in relation to the offer, while also calling into question Emerald’s pre-bid acquisition, as well as its acquisition of Bullseye director interest in the takeover target.

The company also claims that Emerald had failed in its continuous disclosure obligations under ASX rules, after failing to disclose the execution of a bid implementation agreement between November 29 and December 7.

Hongkong Xinhe was seeking an interim order restraining Emerald from processing any acceptances under the bid, and was seeking final orders for “corrective disclosure” from both Bullseye and Emerald, and has asked the Panel to address the ‘springboard’ advantage gained by Emerald through its pre-bid conduct.