Gina Rinehart’s Hancock Prospecting is aiming to further diversify its operations by taking over Sydney-based Riversdale Resources, which is focused on developing a new coal project in Canada.
Hancock will outlay $599 million if the all-cash takeover offer is successful.
It comes just six months after Hancock acquired a 19.8 per cent stake in Riversdale, at a price of $1.75 per share.
The takeover is pitched at $2.20 per share but the price will increase to $2.50 per share if Hancock’s holding reaches more than 50 per cent.
Hancock employed a similar strategy when it acquired Perth-based iron ore miner Atlas Iron.
Riversdale’s founding shareholders - Steve Mallyon, Michael O’Keeffe and Anthony Martin – all intend to accept the offer.
Collectively, they hold 16.5 per cent of Riversdale’s issued shares.
The takeover’s success rests primarily with private equity group Resource Capital Funds, which has a 48 per cent stake in Riversdale, which is unlisted.
Hancock said the $2.50 per share offer price represented a 47 per cent premium to the average subscription price of $1.70 that it paid for its shares in August and September 2018.
It’s also a 43 per cent premium to the $1.75 maximum subscription price for any new share issued by Riversdale during thee last 12 months.
The offer is not subject to any minimum acceptance or due diligence conditions.
Hancock executive director Jay Newby encouraged Riversdale shareholders to accept the offer.
“On behalf of Hancock Prospecting and (its bidding subsidiary) Hancock Corporation, we are delighted to provide the shareholders of Riversdale with this all cash offer,” Mr Newby said in a statement.
“The directors of Hancock consider that its premium pricing and low conditionality make it a compelling opportunity for Riversdale shareholders.”
Hancock’s legal adviser is Corrs Chambers Westgarth.
Hancock’s main assets are a 50 per cent stake in the Hope Downs iron ore joint venture and a 70 per cent stake in Roy Hill Holdings.
The company said it had cash reserves of $3 billion, which meant funding the takeover would not be an issue.