Tomorrow's News today:-))
De Beers coughs up for Ashton, Directors recommend
October 5, 2000
Ashton Mining (ASH) has recommended that shareholders accept a higher takeover bid from South African miner De Beers, in the absence of a higher offer. De Beers has now offered $2.28 per Ashton Mining shares, compared to its original offer of $1.62 cash per share. The revised offer represents a 45c increase on the initial offer and a 23% premium to Rio Tinto Ltd's $1.85 cash per share bid.
In a statement to the Australian Stock Exchange, Ashton said it welcomed the announcement by De Beers Australia Holdings Pty Ltd that it intends to increase its offer price for all shares in Ashton to $2.28 and to extend its offer until October 27. "In the absence of a higher offer, Ashton's directors recommend that shareholders accept the revised De Beers' offer," Ashton said. "Ashton directors intend to accept the revised offer for their personal shareholdings, in the absence of a higher offer."
The revised De Beers offer falls within the range from independent expert KPMG Corporate Finance, which valued Ashton at between $2.23 and $2.70 per share.
Ashton also said it intended to pay a special fully franked dividend of 20c per share in the event that De Beers achieves acceptances for 50.1% of Ashton shares. "This dividend again demonstrates Ashton's ability to add to shareholder wealth," Ashton said. "Under De Beers' revised offer, the cash amount of the special dividend, once paid, will be deducted from the revised offer price. However the $0.05 per share dividend already paid by Ashton on 14 September 2000 will not be deducted from the revised offer price."
Ashton has also agreed to compensate De Beers for various expenses and losses in the event that a higher offer is made in which control of Ashton passes to a competing bidder. Ashton said that amount was capped at two cents per Ashton share.De Beers will declare its revised offer free of a number of conditions, in particular that relating to the marketing of Argyle production. The offer remains conditional on 50.1% minimum acceptance, approval by the Foreign Investment Review Board and foreign competition regulators.
Ashton chief executive Doug Bailey welcomed De Beers' higher offer which he said was a positive development for Ashton shareholders."We are pleased De Beers has raised its offer after reviewing the information and forecasts contained in Ashton's target's statement," Mr Bailey said. "De Beers' revised offer recognises the underlying value of Ashton and the strength of its position in the diamond market."
It is believed that De Beers was able to justify a higher offer for Ashton by virtue of it holding as much as $300 million of accumulated tax losses from an Australian exploration subsidiary. If it is successful in its bid for Ashton, these losses could be used as a tax shield.
At the close of trade yesterday, Ashton shares were 9c lower at $1.99. |
