17/07/2008 - 10:20

Bumi locks in majority stake in Herald

17/07/2008 - 10:20

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PT Bumi Resources TBK has gained majority control of Herald Resources Ltd, lifting its stake to 51.34 per cent after its former rival accepted the takeover offer yesterday.

PT Bumi Resources TBK has gained majority control of Herald Resources Ltd, lifting its stake to 51.34 per cent after its former rival accepted the takeover offer yesterday.

In a substantial shareholder notice to the stock market, the Indonesian bidder increased its share holding from 19.94 per cent to over 51 per cent or 103.6 million shares.

Chinese-Indonesian consortium Antam-Zhongjin allowed its $2.80-a-share, $554 million bid to lapse on Tuesday, prompting Herald directors to urge its shareholders to immediately accept Bumi's $2.85-a-share, $564 million offer.

Bumi's offer period has been automatically extended by 14 days and is now scheduled to close on July 30.

Bumi warned that if shareholders do not accept the offer before it closes - and Bumi holds a majority of Herald shares but is not entitled to proceed with compulsory acquisition - liquidity in Herald shares may be diminished.

It also said Herald's share price may fall below the $2.85 offer price.

Shares in Herald closed steady at $2.83 after reaching $2.86 in intraday trade.

Bumi said it was in discussions with Herald regarding the appointment of "an appropriate number of Bumi's nominees to the Herald board".

It said it recognised Herald's strong existing management team and employees, and intended to work with them on Herald's as-yet-undeveloped Dairi project in North Sumatra.

Bumi kicked off its takeover play for Herald with a $2.25 per share bid on December 12, valuing the target at $444.8 million - almost $119 million lower than the successful bid.

During the bidding war, Bumi extended its offer period eight times while Antam-Zhongjin did so five times.

Bumi made four offers while its rival made three bids.

A fortnight ago, Antam-Zhongjin demanded a $5 million break fee payment from Herald, payable within 10 days, because it had backed the competing proposal.

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