The board of Consolidated Minerals Ltd has recommended Palmary Enterprises Ltd's $902 million all-cash takeover bid for the company, withdrawing its favourable recommendation for the Pallinghurst bid.
The board of Consolidated Minerals Ltd has recommended Palmary Enterprises Ltd's $902 million, or $3.95 per share, all-cash takeover bid for the company, withdrawing its favourable recommendation for the Pallinghurst bid.
The Ukranian bid came last week, raising the stakes in the battle for ConsMin and nearly doubling the original bid by Brian Gilbertson's UK-based investment group Pallinghurst.
Michael Kiernan's Terrirtory Resources was also in the fray with an offer of $2 cash plus 1.5 ordinary Territory shares for each ConsMin share.
The full text of a company announcement is pasted below
Consolidated Minerals Limited (ASX: CSM, AIM: CNM, FSE: CMN) announces that:
- the directors of CSM welcome the announcement by Palmary Enterprises Limited (Palmary) of its intention to make a $3.95 all-cash off-market offer for each CSM share (Palmary Offer) and unanimously recommend the Palmary Offer as being in the interests of CSM and its shareholders in the absence of a superior proposal;
- CSM withdraws its recommendation for the all-cash off-market takeover offer from the Pallinghurst Consortium (Pallinghurst) of $3.60 for each CSM share (as described in Pallinghurst's Bidder's Statement dated 27 July 2007 (and supplemented by Pallinghurst's Supplementary Bidder's Statement dated 31 August 2007)) (Pallinghurst Offer); and
- CSM recommends that CSM shareholders do not accept 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 Palmary Offer
The announcement by Palmary dated 31 August 2007 (Palmary Announcement) advised that Palmary intends to make the Palmary Offer comprising an all-cash offer of $3.95 per CSM share.
The Palmary Offer represents a 9.7 per cent premium to the value of the Pallinghurst Offer and a 15.8 per cent premium to the value of the Territory Offer[1].
Although the Palmary Offer will not be subject to a minimum acceptance condition, it does remain subject to other conditions (as detailed in the Palmary Announcement). Your directors believe that, in the absence of a superior proposal, the conditions to the Palmary Offer either will be satisfied, waived or are within the control of CSM.
After careful consideration of the information contained in the Palmary Announcement and the other information provided to date by Palmary to CSM, the directors of CSM unanimously consider that the Palmary Offer is superior to the Pallinghurst Offer and the Territory Offer and accordingly unanimously recommend the Palmary Offer as being in the interests of CSM and its shareholders in the absence of a superior proposal.
Palmary will provide further details in relation to the Palmary Offer and the intentions of Palmary in relation to CSM in Palmary's Bidder's Statement that is scheduled to be dispatched to CSM shareholders before the end of October.
CSM's Target's Statement in response to the Palmary Offer will be dispatched to CSM shareholders shortly after receipt of the Palmary Bidder's Statement and will further outline the reasons for your Directors' recommendation in relation to the Palmary Offer.
Withdrawal of recommendation for the Pallinghurst Offer
The Board of CSM is withdrawing its recommendation for the Pallinghurst Offer as the Board unanimously considers that the Palmary Offer is a superior offer to the Pallinghurst Offer for the reasons outlined above.
CSM will, as soon as practicable, issue to CSM shareholders a Supplementary Target's Statement in relation to the Pallinghurst Offer supplementing its Target's Statement dated 14 August 2007. In the meantime, the Board of CSM recommends that CSM shareholders do not accept the Pallinghurst Offer.
Rejection of the Territory Offer
The Board of CSM recommends that CSM shareholders do not accept the Territory Offer as the Board unanimously considers that the Palmary 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 do not accept the Territory Offer.
Summary
The CSM Board unanimously recommends that CSM shareholders take no action in advance of receipt of the Palmary Bidder's Statement. None of the directors of CSM intend to accept the Pallinghurst Offer or the Territory Offer in respect of their own holdings in CSM shares.
The Board of CSM will continue to keep the market informed of further developments.
CSM is being advised by JPMorgan and Blake Dawson Waldron.