Tethyan still on the table

THE ongoing takeover saga of Tethyan Copper took another turn last week when Skafell Pty Ltd re-entered the race for the Western Australian-headquartered copper explorer with a new bid of $1.35 per share. Skafell is the takeover vehicle of Hong Kong asset management group Crosby Capital Partners. This comes after Tethyan had previously recommended shareholders accept a $1.20 a share offer from rival bidder, Chilean resources company Antofagasta. It appeared then the dust was about to settle on what had been an aggressive takeover battle with a distinct international flavour – a West Perth-based copper company with Pakistani operations being pursued by a Hong Kong investment banking group and a Chilean copper company. The interchanges between Tethyan and Skafell have been, at the very least, lively, and those following the takeover tussle could be forgiven for forming the opinion that Tethyan did not particularly want to do business with Skafell. Skafell’s latest play shows that all is fair in love and war – and takeovers. After Antofagasta’s $1.20 per share offer, at a time when Tethyan shares were trading at 89 cents, Tethyan was unanimous in its support of the deal. Tethyan managing director David Moore said at the time: “The board is unanimously of the view that this new cash offer represents an outstanding outcome for shareholders and we have no hesitation in recommending its acceptance in the absence of a superior offer.” Now, with the latest Skafell bid on the table, Tethyan don’t seem so opposed to its advances. “The new offer is a fabulous outcome for shareholders. Skafell’s previous approaches have been opposed only because they undervalued the company,” Mr Moore told WA Business News. The Tethyan board has advised shareholders to take no action until it has had time to meet to consider its position. It has been at the centre of intense off-market takeover interest from the two contrasting suitors for the past 11 months. Skafell began the takeover machinations with an initial offer of 64 cents in May last year. This was quickly rebuffed by Tethyan, primarily on the grounds that it grossly undervalued the company. Antofagasta made its initial play in late December, proposing a $182 million joint venture with Tethyan, which at the time the board of Tethyan recommended be accepted by shareholders to, in part, help ward off the advances of Skafell. “The Antofagasta joint venture offers long-term upside for shareholders and was very well received,” Mr Moore said. Despite Tethyan and Antofagasta reaching agreement, the proposed joint venture still required regulatory and shareholder approval and this allowed time for the Skafell led Crosby to make its next move – to increase its Tethyan offer to 77.5 cents a share, on January 19 this year. Skafell’s revised offer met with the same swift response and was unanimously rejected by Tethyan. Tethyan argued that Skafell continued to significantly undervalue the company’s stock, particularly in light of the fact that total mineral resources identified at its headline Reko Diq copper-gold project in Pakistan had doubled, and the price of copper and gold had also recently risen. Antofagsta returned serve on February 14 with its $1.20 per share offer, which valued Tethyan at $190 million, for the total issued capital of the company. But, the Crosby backed entity’s latest offer of $1.35 a share, which has been extended to April 3, has put it in the running for Tethyan for the first time. Tethyan’s shares have enjoyed a sustained run over the past four months on the back of the takeover interest and closed at $1.40 on Friday March 10. Antofagasta, under an agreement with Tethyan, had three working days to make a counter offer, taking it to close of business on Wednesday March 15.


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