Gascoyne shareholders to mull takeover

A bidder’s statement has been sent to the shareholders of Gascoyne Resources, who will consider a $120 million takeover proposal while a conflicting merger deal heads to court next week.

Westgold Resources, which is proposing to acquire Gascoyne and its Dalgaranga operation in the Mid West, sent a bidder’s statement to the target’s board earlier this month, enclosing an all-scrip conditional offer which has now been forwarded to shareholders.

It requires acceptance from at least 50.1 per cent of Gascoyne’s shareholders, and that a separate merger deal with Subiaco-based Firefly Resources does not come into effect.

The alternate merger was announced in June and would occur via Gascoyne’s all-scrip takeover of Firefly.

Firefly’s shareholders voted in favour of the scheme at a meeting earlier this week, with a court hearing to approve the merger scheduled for November 1.

Westgold continues to claim its offer is superior to the “highly dilutive” merger with Firefly, noting three of the target’s shareholders have indicated their support for the takeover proposal.

They are Deutsche Balaton, which owns about 22 per cent of Gascoyne’s issued capital, Belmont-based NRW Holdings (14.7 per cent) and First Sentier Investors (10 per cent).

However, the scheme implementation deed (SID) with Firefly does not contain a termination right for Gascoyne even if the target’s board determined the Westgold offer was a superior alternative.

This afternoon, Gascoyne said it had written to Firefly to ask whether the board would exercise its right to terminate the SID “should the Gascoyne board determine that the Westgold offer was superior”.

But Firefly declined to confirm if it would exercise its termination right, Gascoyne said.

“Given that the Firefly scheme termination condition is not currently capable of being satisfied, Gascoyne again reiterates that shareholders should take no action in relation to the Westgold offer at this time,” Gascoyne said.

The company warned shareholders that, if they accepted the Westgold offer earlier than advised, they would give up their right to trade their shares or have limited rights to withdraw their acceptance.

The case was brought to the Takeovers Panel earlier this month, with Westgold seeking interim orders including that the SID with Firefly be amended to contain a termination right to Gascoyne.

But the panel declined to conduct court proceedings since Gascoyne's board had earlier determined the offer from Westgold was not superior to the deal with Firefly.

Westgold appealed the decision, which the panel knocked back this afternoon.

"The review panel concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances," it said.

Westgold, which also operates in the Mid West, is offering one of its shares for every four shares in Gascoyne, valuing the target at roughly $120 million. 

The offer will increase to 3-for-11 if the minimum acceptance is reached. It’s scheduled to close on November 29.

Gascoyne's shares have fallen almost 10 per cent, closing at 42 cents this afternoon.

Westgold's shares closed up 0.3 per cent to trade at $1.95.