That aged well. For a while RNU traded under cash backing but a recent jump by them has restored their EV to a positive number. In the meantime, EGR share price has doubled. One more day of even modest trading and EGR will have a MC that exceeds RNU's.
- EGR's MC at 24.5c is $111.3m
- RNU's MC at 4.7c is $119.5m
With the MC's now near equal, it raises the interesting and perhaps crazy idea? Would it be worth doing a ~50:50 Merger with RNU?
I presume doing so would mean the combined group would be the second largest graphite owner in the world behind SYR. The group would have the cash to mean there is no reasonable doubt that with the presumed KfW IPEX-Bank loan, Epanko would be successfully developed. It would however mean the group also has the resources to continue progressing spherical graphite / recycling as Epanko is developed. If it proved sensible, a RNU's Australian proposition could be developed with Epanko operational cash flow. The dilution from merging with RNU would be minimally different from a CR of similar size to RNU's cash but you get a project that may have some future value as well. The enlarged group may also be in a position to pick up the BKT assets from receivers which would most likely be beneficial to a new, enlarged group but something that is beyond the scope of EGR to sensibly do at present. If the group were to become a multi-location supplier of graphite that would be a valuable selling point to potential customers.
Reasons against - It would be a distraction for EGR. I'm not sure the cultures of RNU and EGR could merge or some of the senior individuals in each team work together constructively. EGR doesn't appear to need to do a CR that large at this point and if their share price keeps on improving, a large CR (if needed) could be achieved at a better price than what would effectively occur by "merging" with RNU. If it were EGR that issued shares to RNU, shares on issue would double.
Thoughts?
(20min delay)