25/11/2020 - 14:00

Shandong ups Cardinal bid

25/11/2020 - 14:00

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China’s Shandong Gold has matched a new bid to buy out takeover target Cardinal Resources, having offered to pay $1.05 per company share.

Takeover target Cardinal Resources has received an improved offer from China's Shandong Gold. Photo: Cardinal Resources

China’s Shandong Gold has matched a new bid to buy out takeover target Cardinal Resources, having offered to pay $1.05 per company share.

Perth-based Cardinal has been the subject of a seven-month takeover battle between Shandong and Russian mining giant Nordgold.

Nordgold made its first bid for Cardinal in March, having offered 46 cents per share. Offers for Cardinal have more than doubled since.

Yesterday, a Ghanaian business – Engineers & Planners – emerged as a new bidder for Cardinal, offering to buy the company for $1.05 per share.

That bid has now been matched by Shandong, as announced by Cardinal this morning, up from its $1 per share bid in September.

The Cardinal board has endorsed previous offers from Shandong, but has been reluctant to accept an offer from Nordgold, noting that a deal with the Russian miner could be subject to regulatory issues.

The board has recommended shareholders accept the latest offer from Shandong Gold “in the absence of a superior proposal”.

The deal would require approval from at least 50 per cent of Cardinal’s shareholders.

About 10 per cent of the company is controlled by Shandong, while nearly 28 per cent is controlled by Nordgold.

Cardinal said the E&P offer of $1.05 per share, while equal to Shandong’s, was subject to a number of conditions including regulatory approvals in Ghana, which is home to Cardinal’s 5.1 million ounce Namdini gold project.

It has recommended shareholders take no action towards the E&P proposal.

“Cardinal will respond to the E&P takeover bid as necessary and as may be required in a formal target’s statement in due course,” the company said in an ASX announcement.

Cardinal did not comment on the proceedings currently before the Australian Takeovers Panel.

They include submissions from Nordgold that allege Cardinal has acted in a misleading or deceptive manner towards shareholders.

Yesterday, Nordgold alleged the bid from E&P was neither an offer nor a higher competing bid.

“The E&P bid does not comply with law and consequently does not (and will not, if made) constitute an ‘offer’,” Nordgold said.

“Among other things, E&P’s bidder’s statement does not contain the written offer terms, does not provide Cardinal shareholders with a method of acceptance, and contains terms inconsistent with the requirements for an off-market bid.”

E&P’s $1.05 per share offer for Cardinal, which has a market capitalisation of about $543 million, expires on December 31.

Nordgold said it did not expect E&P to gain FIRB approval before the offer closes, and that it was unlikely E&P would have the funding required to facilitate the transaction since the company “has not demonstrated sufficiency of funding”.

E&P is owned by businessman Ibrahim Mahama, who is also the owner of a company representing MAN diesel trucks, a cement processing plant, and one of Ghana's largest poultry farms.

His $1.05 per share offer for Cardinal trumped previous $1 bids from Shandong and Nordgold.

Euroz Hartleys SecuritiesCanaccord Genuity, and Canadian companies Maxit Capital and BMO Capital Markets are acting as financial advisers to Cardinal, while HopgoodGanim Lawyers and Calgary-based Bennett Jones are acting as legal advisers.

Cardinal was trading 0.47 per cent lower at 3:17pm AEDT, to $1.06 per share.

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