Locals lined up as takeover targets

Eight Western Australian companies will disappear from the Australian Stock Exchange this year if all of the current takeover offers succeed, though unexpected developments in some offers could produce a different result.

The latest WA takeover, announced this week, was Canadian company Emerson Exploration’s offer for Terra Gold.

Emerson is one of three international firms involved in takeovers of listed WA companies.

Other international bidders are Hong Kong group Crosby Capital, which is facing spirited opposition from takeover target Tethyan Copper, and South Africa’s Kumba Resources, which said it may seek to move to full ownership of mineral sands miner Ticor but has not put a firm offer on the table.

Another takeover facing spirited opposition, and unexpectedly so, is Straits Resources’ partial offer for copper miner Tritton Resources.

When Straits first announced its offer for 50 per cent of the Tritton shares it did not already own, all the signs were that Straits would easily succeed.

The two companies had a close history; Straits already held 26 per cent of Tritton and Tritton’s independent directors said they would recommend acceptance of the offer, subject to an independent expert’s report.

But last month the independent expert, accounting firm HLB Mann Judd, valued Tritton shares at 76.1 cents, well above the value of the offer, and therefore concluded the offer was neither fair nor reasonable.

The independent directors’ rejection of the offer has brought an element of hostility to the takeover, with Straits challenging the methodology applied by the independent expert and questioning his independence.

In their defence document, the independent directors have rejected these arguments and gone on the attack, claiming Straits’ bidder’s statement was misleading.

Another hotly contested takeover – Melbourne firm IWL’s offer for financial technology company JDV – could soon come to an end.

IWL acquired 37 per cent of JDV in an initial takeover offer earlier this year, and last month announced a second offer.

IWL is now offering cash (80 cents per share), which could be more attractive than its initial scrip offer. A key part of JDV’s defence was its repeated assertion that it was in discussions with other parties regarding possible offers, but last month conceded the discussions were not likely to result in any alternative offer.

Its fate rests with Westpac Bank and Royal Bank of Canada, which each hold a 28.6 per cent stake.

In contrast to the hostile takeovers, several other offers are expected to proceed smoothly.

The directors of information technology firm Alphawest said last month they would recommend that shareholders accept a $25.9 million offer by Optus, in the absence of a higher competing offer.

Similarly, the directors of oil and gas companies Arc Energy and Voyager Energy have unanimously recommended acceptance of their merger, via a scheme of arrangement.

CI Resources (formerly Asset Backed Holdings) is also using a scheme of arrangement to try and complete its long-running takeover of unlisted Christmas Island miner Phosphate Resources.

Emerson’s scrip bid for Terra is effectively a reverse takeover, since Terra’s shareholders, led by its executive chairman and major shareholder Gilbert Playford, will end up owning a majority of the combined group.

If the takeover is successful, Terra will be delisted from the ASX but the combined group will remain listed on Canada’s TSX Venture Exchange.

Emerson’s directors said they “intend to leverage off the significant premiums usually attributed to advanced gold projects in North American markets” to raise capital for the development of Terra Gold’s Australian gold assets and to acquire new gold assets.

Terra’s assets include the Maud Creek gold project in the Northern Territory.