Nedlands-based uranium company Redport Ltd has confirmed its support for a takeover bid by Canadian firm Mega Uranium Ltd, which values the company at $88 million.
Nedlands-based uranium company Redport Ltd has confirmed its support for a takeover bid by Canadian firm Mega Uranium Ltd, which values the company at $88 million.
Mega, which currently holds 18.5 percent through associates and in its own right, has doubled the number of its own shares offered in exchange for Redport shares it announces a share split today.
Mega will value Redport shares at 14c, with 9c for options. It will also offer 20 Mega shares for every 574 Redport shares held and 20 shares for every 894 Redport listed options.
In Redport's target statement, company directors stated they would accept the offer for their own share and option holdings, and suggested other shareholders do the same.
In an announcement to the stock exchange, Redport chairman Richard Homsany said the deal offered compelling benefits, including a substantial premium on the pre-bid share price, diversification benefits and reducing political and regulatory risks.
In the past financial year, Mega acquired Queensland companies Uranium Mineral Ventures and Future Metals and Energy Ltd.
Redport Ltd has five prospects in WA and SA, the most advanced being its Lake Maitland project, 130km south-east of Wiluna, which it describes as one of Australia's largest proven unmined uranium deposits.
The full text of the Redport announcement is pasted below
Directors of Redport Limited recommend that Redport securityholders accept the Mega Uranium Limited share offer, confirming their initial view expressed in July when Mega announced it intended to make an offer.
Redport directors say in their target's statement, lodged with ASIC today together with the offer documents, that in the absence of a superior offer the directors unanimously recommend Redport shareholders and optionholders accept the Mega offer, which directors intend to accept for their own shares and options.
Since the initial announcement, Mega has undertaken a share split, which will take effect on 24 August 2006, doubling the number of Mega shares on issue. To compensate for this and maintain the value of the offer at 14c per Redport share and 9c per Redport listed option, Mega is doubling the number of shares offered. It is offering 20 Mega shares for every 574 Redport shares and 20 Mega shares for every 894 Redport listed options. The number of Mega shares offered for all Redport unlisted options is also doubled.
The bidder's statement and the target's statement containing the response of the Redport directors are expected to be mailed to securityholders on 6 September 2006.
Mega's market capitalisation is more than four times that of Redport. It is an acquisitive uranium exploration company, with uranium exploration projects in Australia, Argentina, Mongolia, Bolivia and Canada. It also has interests in base and precious minerals exploration properties in Canada and a copper-nickel exploration project in Guinea, West Africa.
Mega is based in Canada and listed on the Toronto Venture Stock Exchange.
Redport chairman Richard Homsany says that the proposed merger with Mega offers compelling benefits. "Consolidation is now taking place in the uranium industry. To reach its goals, a company of Redport's size must consider the merits of an offer to join a
larger and fast growing uranium company," he says, adding that a merger with Mega offers compelling benefits.
The main reasons the directors have recommended the offer are:
- Substantial premium: On 7 July 2006, when the offer was first announced, it represented a significant 33% premium to the pre-bid share price and a 62% premium to the Redport listed option price. The offer values Redport at over $88 million.
- Increased scale: The combination of Redport's and Mega's assets will create a uranium company, ranking in the top 10 in the world by market capitalisation. It will be capable of becoming a significant long-term international producer. The combined group will have an experienced management team, enhanced capability of early mine development, and greater access to capital markets to
fund production.
- Diversification benefits: Securityholders will gain exposure to a diverse portfolio of international uranium projects spanning six countries.
- Reduced political and regulatory risk: The diversity of projects will reduce Redport's risk. The company's most advanced project is the Lake Maitland uranium deposit in Western Australia. Mining of uranium in Western Australia is not permitted by current State Government policy. The combined Redport/Mega group will have a portfolio of prospective projects in various uranium regions
throughout the world, which increases the likelihood of discoveries in jurisdictions where policy allows uranium mining.
- Mega is the largest shareholder in Redport: As Mega and its associates own 18.5% of the fully diluted capital of the Company, its stake reduces the attractiveness of Redport to other potential bidders.
The offer will open on 6 September 2006 and is expected to close on 6 October 2006.
Mega will make a Canadian broker facility available for those Redport securityholders who accept the offer and wish to sell their Mega shares in future.
