Directors of AurionGold are repeating a recommendation made two weeks ago that shareholders reject Placer Dome‘s (PDG-T) hostile, all-share takeover offer.
In a deal unveiled on May 27, Placer is offering 17.5 of its shares for every 100 AurionGold shares. At the time, the offer valued the Aussie miners’ shares A$4.51 apiece — a 30% premium — for a total offer of about US$1.1 billion (A$2 billion).
Since the offer was made, Placer shares on the New York Stock Exchange have nosedived 24%, from US$14.27 on May 24 to US$10.79 at the close on July 5. In dollar terms, it’s wiped about US$270 million off the value of the offer.
Still, with gold prices sagging and no rival bidder coming onto the scene, Placer has decided to play hardball by extending the offer to July 24 without offering any cash or share sweeteners.
In letter to shareholders released July 5, AurionGold Chairman Richard Warburton comments that Placer has “failed to make any significant improvement to the offer or to reduce the considerable uncertainty attached to it.”
He emphasizes that, at the July 4 close, Placer’s offer valued AurionGold at A$3.42 per share, or below the A$3.48 level that the shares were trading at immediately prior to Placer’s offer.
Warburton adds that all AurionGold directors who own shares in AurionGold will reject the current offer and won’t sell shares into the market.
“Your directors will continue to pursue opportunities aggressively to maximize value for you,” concludes Warburton.
Placer’s offer is conditional on at least 51% of AurionGold’s shares being tendered.
Taking a page from Newmont Mining’s takeover of Normandy Mining, which had the blessing of minority Normandy shareholder Franco-Nevada Mining, Placer launched the AurionGold takeover bid with the “pre-acceptance” of South Africa’s Harmony Gold (HGMCY-Q), which maintains a 9.8% stake in Auriongold.
No additional large shareholders have been publicly supportive of Placer’s offer.
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