connection to alacer?, page-2

I for one would not be happy with such a merger!
I wrote many time on HC regarding Avoca Resources (of which I was then a shareholder)warning that Pala Resources (who were trying to do a T/o of Avoca) were working behind the scenes to merge with Alacer.
see this old new extract for details.
Angers


Avoca Resources
By: Gaurav Sodhi

Shareholders of Avoca Resources went to sleep on Wednesday last week thinking they owned gold mines in WA. The next morning, they woke to news that Avoca had proposed a merger with Canadian-based Anatolia Minerals, and that they now faced the prospect of owning a new mine in Turkey.

This didn’t elicit a favourable reaction; Avoca shares instantly fell almost 20%. With mergers and acquisitions in the gold sector running hot, to see Avoca involved in corporate activity was not terribly surprising. To see it involved in Turkey, however, was.

Avoca Managing Director Rohan Williams has talked about consolidating the highly prospective eastern goldfields in WA for years. Avoca even acquired a struggling junior miner to pursue this end. The strategy seemed clear and sensible and, importantly, to be working well. So why the sudden change and move to Turkey? We’re as baffled as the rest of the market.

Avoca’s merger partner looks to have a sound mining operation in Turkey and the combined company will be a $2bn producer with several growth options. But aside from getting bigger for the sake of it, we can’t see why Avoca and Anatolia’s assets should be consolidated. This has all the hallmarks of a half-baked idea that deserves to be back in the oven.

Pala Investments, a Russian investment company that is a major shareholder in both miners has been prodding Avoca into corporate activity for some time and may be behind the deal. Some have speculated that involving Anatolia is a move to prompt a bid from a gold major, providing an exit opportunity for Pala. Others have suggested the move is a defensive one sought by Avoca, which may have been concerned about an unsolicited bid itself.

Whatever the reason, the benefit to shareholders doesn’t seems obvious. Avoca has been a highly successful local gold miner. Its exploration team is outstanding and management has built up a formidable operating track record. To see it opt for a potentially wayward acquisition is hugely worrying.

The merger deal with Anatolia values Avoca at about $3.60 and despite the share price being well below that benchmark, we are happy to take our investment elsewhere. The share price is down marginally since 3 Sep 10 (Hold - $3.18) and we recommend those who own this stock now SELL.