Pallinghurst raises bid for Consolidated Minerals
theage.com.au
Tan Hwee Ann
July 21, 2007
PALLINGHURST Resources Australia has raised its bid for Consolidated Minerals to $752 million cash, countering a higher offer that includes stock from Territory Resources.
Pallinghurst, an investment fund led by former BHP Billiton CEO Brian Gilbertson, agreed to pay $3.30 a share for the Perth-based company, Consolidated said in a statement.
Territory's cash and stock bid is worth $806 million, based on the closing price.
Consolidated produces 10 per cent of the world's high-grade manganese used in steel-making and has forecast rising prices as it returns to profit.
Switching to an all-cash approach from a bid that had included stock means Pallinghurst is offering a guaranteed price to shareholders.
"It's an all-cash offer and a simpler structure," said Troy Angus, of Paradice Investment Management in Sydney. He has not decided which offer to accept. "It (Pallinghurst) represents a more compelling offer," he said.
Consolidated shares fell 4¢ to $3.46. Territory shares rose 12¢ to $1.145.
The takeover battle pits Mr Gilbertson, who sold Billiton to BHP to create BHP Billiton in 2001, against Territory chairman Michael Kiernan, who was Consolidated's managing director until last year.
Mr Kiernan said yesterday that Territory would review its offer.
He would not say whether Territory would raise it or swap to an all-cash bid.
Pallinghurst is aiming to win control of about 60 per cent of Consolidated in the bid and plans to maintain its listing in Australia.
Consolidated's board has recommended the offer and its directors plan to accept for 60 per cent of their holdings.
"This strengthens the chance of Pallinghurst being successful," said Southern Cross Equities analyst David Radclyffe.
Gilbertson wants to turn Consolidated into a company worth up to $10 billion with investments in coal and iron ore to add to the company's manganese and nickel production. This is the second time Pallinghurst has raised its offer, which was first made in February.
"We maintain this vision of being a much bigger player in the industry," said Mr Gilbertson, chairman of Pallinghurst Resources Fund LLP, which controls the Australian unit.
He said Pallinghurst still planned to provide $250 million to Consolidated for acquisitions and growth even with the increased offer.
Territory offered $2 cash plus 1.5 of its shares for Consolidated, which had a market value of $A798 million before yesterday.
The value of the two bids was calculated by Bloomberg based on Consolidated's traded shares and excluded options and convertible notes.
Fully diluted, Pallinghurst's offer was valued at $873 million, it said. Consolidated hired JPMorgan Chase as its financial adviser. Deutsche Bank AG is advising Pallinghurst. |
