PERTH (miningweekly.com) - Mining contractor NRW has launched a takeover offer for vertically integrated engineering design, construction and operational services provider Primero Group.
NRW is offering Primero shareholders 27.5c in cash and 0.106 NRW shares for each Primero share held, implying a value of 55c each for Primero’s share, or a total offer value of A$100-million.
The offer price represents a 14.6% premium to Primero’s closing price on November 23, and a 30.1% premium to its 30-day volume weighted average share price.
The directors of Primero have unanimously recommended that shareholders accept the offer, in the absence of a superior proposal.
Primero’s directors, who collectively control some 30% of the company’s shares, have confirmed that they will accept the offer as soon as practicable and in the absence of a superior proposal.
The companies said in a joint statement on Tuesday that NRW’s acquisition will provide Primero shareholders with the opportunity to receive both an attractive price and consideration comprising both cash and NRW shares, avoiding a potentially significant dilutive capital raising to fund working capital requirements for the 2021/22 contracted order book, given the continued non-payment by customer Wartsila on the residual Barker Inlet power station contract monies.
As an NRW shareholder, Primero shareholders will be investing in a profitable and financially secure company with a diversified revenue stream, attractive growth opportunities and a proven management team, which the Primero management team will become a part of, the companies say.
Moreover, Primero shareholders will also benefit from the higher liquidity of NRW shares.
NRW for its part told shareholders that the acquisition of Primero aligned with its strategic growth plan as its core competencies were complementary to NRW’s strategic renamed minerals, energy and technologies platform.
“The acquisition of Primero will provide NRW with the opportunity to expand its minerals, energy and technologies specialised capability and to leverage the combined expertise of both companies to pursue new business initiatives across a large pipeline of opportunities,” says NRW MD Jules Pemberton.
“It builds on NRW’s recent acquisition of DIAB Engineering and RCR Mining Technologies and represents a further diversification of our strategic platform to offer clients continuity of services across the whole lifecycle of resource projects, from early planning, design, development, construction to operations and maintenance.”
The offer is subject to a number of conditions, including a 90% minimum acceptance.
Meanwhile, the two companies have entered into a binding term sheet under which NRW will provide Primero with a A$10-million second ranking secured loan facility to assist Primero in funding its short-term working capital needs during the offer period.
Any loan amount advanced will be repayable on the one-year anniversary of the bid implementation agreement, but there was an obligation to repay those amounts in full under certain prescribed circumstances, including the majority of Primero directors backing a competing bid, or any of the bid conditions not being satisfied by the relevant date.