The copper and gold miner PanAust Limited (ASX:PNA) has received a reduced taker over bid from the Chinese company Guandong Rising Assets Management (GRAM). The Chinese firm currently owns 22.5 per cent of the Australian company and has offered $1.1bn, or $1.71 per share, for the remaining shares. This offer is 25.7 per cent lower than the $2.30 per share offer that was made last May. GRAM is taking advantage of the slump in commodity prices as copper and gold trade near five year lows. “It’s obviously a lot lower than the previous offer but copper prices are a lot lower, too,” said Reg Spencer, a mining analyst at Canaccord Genuity.
In the last year, PanAust has impaired the value of its assets by $US187m amid falling commodity prices. GRAM’s chairman Wei Zhue said in letter that the offer provided PanAust shareholders the certainty of cash and that a better offer was unlikely. “I believe that the likelihood of another bidder emerging with a superior proposal is low, given the substantial cash premium offered and our current relevant interest in PanAust shares” Mr. Zhue said. Shares of PNA have been in a downward trend since reaching a share price of $4.26 in January 2011. The announcement of the deal has caused the share price of PanAust to surge almost 50c, or 40 per cent, to $1.72 per share so far today. The one-year return for PNA is now close to 12 per cent. Partially due to this deal, shares of PNA have advanced 21.34 per cent so far this year.
Author: Imran Valibhoy
Mar 30, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.