Copper and Gold miner PanAust (ASX:PNA) has rejected a takeover bid from Guangdong Rising Assets Management (GRAM). The Chinese company previously offered an unconditional takeover deal valued at $1.1bn, or $1.71 per share. Although the deal was 26 per cent lower than the bid the Chinese company made in May 2014, it was still 40 per cent higher than the volume weighted average price for shares of the Australian company. Nevertheless, PanAust rejected the deal and alleged that Guangdong Rising was taking advantage of the company’s lowered share price due to falling copper prices. “When faced with any takeover offer, PanAust shareholders should expect the offer price to fairly reflect this longterm value potential," said PanAust managing director Fred Hess. "We believe GRAM's current offer price falls short of this level.”
At the time of the offer, GRAM already owned 22.5 per cent of the Australian mining company. Since then, it has increased its stake by 10.58m shares to 24.1 per cent. Board members of PanAust have advised shareholders to take no action in reference to the offer. But the board members have stated that the company is still engaged with GRAM to “determine whether a mutually acceptable offer price can be agreed". The company has cited a 25 per cent increase to copper production without any additional capital investment as one reason why it believed the offer was too low. "My disappointment is the company's share price was so low in the first place, which left the door open for an offer at the level that GRAM have pitched at," said former managing director Gary Stafford.
PNA has fallen .3c, or .17 per cent, to $1.74 per share around 1:15pm on Wednesday. Although PNA fell over 50 per cent between August 2014 and March 2015, shares of the company have partially recovered. PNA is up 3.70 per cent in the last 12 months and 22.76 per cent so far this year.
Author: Simon Herrmann
Apr 15, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.