The long-running takeover battle for Consolidated Minerals Ltd has taken another unexpected turn after Brian Gilbertson's Pallinghurst consortium lifted its offer to $4.10 per share and vowed to match any increased offer lodged in the next three weeks.
The long-running takeover battle for Consolidated Minerals Ltd has taken yet another unexpected turn after Brian Gilbertson's Pallinghurst consortium lifted its offer to $4.10 cash per share and vowed to match any increased offer that was lodged over the next three weeks.
Pallinghurst's revised bid was welcomed by the ConsMin board, which withdrew its support for Palmary Enterprises' $3.95 per share bid in favour of the new Pallinghurst proposal.
ConsMin has also agreed to pay a $10.84 million break-fee, equal to one per cent of the bid's value, to the Pallinghurst consortium.
The latest Pallingurst bid is nearly double the value of its original $2.28 per share offer lodged in February.
It has been forced to increase its offer several times because of competing bids lodged by Michael Kiernan's Territory Resources Ltd and Ukrainian group Palmary.
In addition, Norwegian group Tinfos conducted due diligence and bought a five per cent stake but has not lodged a takeover bid.
A ConsMin announcement is pasted below:
Consolidated Minerals Limited (ASX: CSM, AIM: CNM, FSE: CMN) announces that:
- the directors of CSM welcome the announcement by the Pallinghurst Consortium (Pallinghurst) that Pallinghurst has increased its all-cash off-market offer for CSM to $4.10 per CSM share (Revised Pallinghurst Offer) and unanimously recommend the Revised Pallinghurst Offer as being in the interests of CSM and its shareholders in the absence of a superior proposal;
- the directors of CSM withdraw their recommendation for the all-cash off-market takeover offer from Palmary Enterprises Limited (Palmary) of $3.95 for each CSM share (as described in Palmary's announcement dated 31 August 2007) (Palmary Offer); and
- the directors of CSM continue to recommend that CSM shareholders take no action in relation to the off-market takeover offer from Territory Resources Limited (Territory) of $2.00 cash plus 1.5 ordinary shares of Territory for every one CSM share (as described in Territory's Bidder's Statement dated 30 August 2007) (Territory Offer).
The Revised Pallinghurst Offer
The announcement by Pallinghust dated 6 September 2007 (Revised Pallinghurst Announcement) advised that Pallinghurst intends to increase its all-cash off-market offer for CSM to $4.10 per CSM share.
In addition, Pallinghurst has undertaken to further vary the Revised Pallinghurst Offer to provide CSM shareholders with a potential top-up payment which would involve Pallinghurst making an additional cash payment to CSM shareholders who have accepted the Revised Pallinghurst Offer, so as to oblige Pallinghurst to "match" the offer price for CSM shares under any subsequent higher-off-market takeover offer made by another bidder. The amount of the top-up payment will reflect the difference between the offer price under the higher rival offer and the Revised Pallinghurst Offer price of $4.10. Further details in relation to the potential top-up payment are set out in the Revised Pallinghurst Announcement attached to this announcement.
The Revised Pallinghurst Offer represents:
- a 13.9% increase to the previous price offered by Pallinghurst for CSM (being $3.60 per CSM share);
- a 3.8% premium to the value of the Palmary Offer;
- a 21.7% premium to the value of the Territory Offer[1]; and
- a premium to the 5 September closing price of CSM shares on ASX.
Furthermore, the potential top-up payment enables CSM shareholders who have accepted the Revised Pallinghurst Offer to still obtain the full benefit of any increased offer price that might arise from a subsequent higher alternative offer that meets the criteria set out in the Revised Pallinghurst Announcement.
Pallinghurst has also confirmed that it has waived all of the remaining defeating conditions of its offer meaning that the Revised Pallinghurst Offer is now unconditional.
The Revised Pallinghurst Offer is scheduled to close at 7pm (Melbourne time) on 13 September 2007.
To secure the Revised Pallinghurst Offer, CSM has agreed to pay a break fee of $10.84 million to Pallinghurst in the circumstances set out in the annexure to this announcement. This break fee replaces the previous break fee which was detailed in Pallinghurst's announcement of 20 July 2007.
After careful consideration of the information contained in the Revised Pallinghurst Announcement and the other information provided to date by Pallinghurst to CSM in relation to the Revised Pallinghurst Offer, the directors of CSM unanimously consider that the Revised Pallinghurst Offer is superior to the Palmary Offer and the Territory Offer and accordingly unanimously recommend the Revised Pallinghurst Offer as being in the interests of CSM and its shareholders in the absence of a superior proposal.
Pallinghurst will provide further details in relation to the Revised Pallinghurst Offer in a Second Supplementary Pallinghurst Bidder's Statement (supplementing Pallinghurst's original Bidder's Statement dated 27 July 2007 and its First Supplementary Bidder's Statement dated 31 August 2007). The Second Supplementary Pallinghurst Bidder's Statement will be dispatched to CSM shareholders as soon as practicable.
CSM's Supplementary Target's Statement in response to the Revised Pallinghurst Offer will be dispatched to CSM shareholders shortly after receipt of the Second Supplementary Pallinghurst Bidder's Statement and will further outline the reasons for your Directors' recommendation in relation to the Revised Pallinghurst Offer.
Withdrawal of recommendation for the Palmary Offer
The Board of CSM is withdrawing its recommendation for the Palmary Offer as the Board unanimously considers that the Revised Pallinghurst Offer is a superior offer to the Palmary Offer for the reasons outlined above.
The Board of CSM recommends that CSM shareholders take no action in relation to the Palmary Offer.
Rejection of the Territory Offer
The Board of CSM continues to recommend that CSM shareholders take no action in relation to the Territory Offer as the Board unanimously considers that the Revised Pallinghurst Offer is a superior offer to the Territory Offer for the reasons outlined above.
CSM will, in due course, issue to CSM shareholders a Target's Statement in relation to the Territory Offer. In the meantime, the Board of CSM recommends that CSM shareholders take no action in relation to the Territory Offer.
Summary
The CSM Board unanimously recommends that CSM shareholders accept the Revised Pallinghurst Offer in the absence of a superior proposal.
The Board of CSM will continue to keep shareholders informed of further developments.
CSM is being advised by JPMorgan and Blake Dawson Waldron.
