Court approves Gascoyne-Firefly merger

Westgold Resources’ proposed takeover of fellow goldminer Gascoyne Resources cannot proceed after the Supreme Court of Western Australia approved a conflicting merger deal with Firefly Resources.

The approval followed weeks of contention between all three companies, with Westgold seeking to acquire Gascoyne through an all-scrip takeover that would’ve valued the target at about $120 million.

However, its offer was subject to Gascoyne's merger with Firefly (announced in June) not proceeding.

The scheme implementation deed (SID) did not contain a termination right to Gascoyne even if its board determined a competing offer was superior.

Attempts to satisfy that condition, including in a recent letter to Firefly, were unsuccessful.

But Gascoyne said the board remained confident of the strategic merits in combining the company's Dalgaranga operation in the Mid West with Firefly's nearby Yalgoo project.

Firefly also owns the Paterson copper-gold project, covering 1,200 square kilometres in the Pilbara.

"Westgold had filed an application to appear, and accompanying submissions, with the court seeking to oppose the scheme but withdrew the application prior to the start of the proceeding," Gascoyne said, noting a lack of termination rights were not uncommon in the Australian M&A market.

Westgold's offer also required acceptance of at least 50.1 per cent of Gascoyne’s shareholders, three of which had indicated their support for the takeover proposal.

They were Belmont-based contractor NRW Holdings, Deutsche Balaton, and First Sentier Investors, which represented almost 47 per cent of Gascoyne's shares on issue.

A bidder's statement was sent to Gascoyne's shareholders on October 29.

The company has reiterated shareholders should take no action toward the offer, given the board cannot terminate the SID with Firefly.

Gascoyne warned that, if shareholders accepted Westgold's proposal, they could lose their ability to trade their shares or have "limited rights" to withdraw their acceptance.

The SID will take effect on November 10, with Firefly’s shareholders to receive 0.34 Gascoyne shares for every share held in the explorer.

As such, Firefly's shares have been suspended from trading.

Meanwhile, Gascoyne’s shares were down 6.4 per cent at 12:30pm AEDT to trade at 36 cents and Westgold’s shares were up 1.3 per cent to $1.92.