Australian Financial Review PRINT EDITION: 23 Mar 2011 Angela Macdonald-Smith
Russia's ARMZ has used the crisis at the Fukushima Daiichi nuclear reactor in Japan to shave 14 per cent off its cash offer for Mantra Resources, but the surge in the uranium explorer's shares showed investors had feared a bigger discount or a collapse of the $1 billion-plus deal.
The Rosatom subsidiary is now offering $6.87 a share in cash, while Mantra will pay an unfranked cash dividend of 15c a share, taking the bid price for Mantra shareholders to $7.02 a share, down from $8.
Mantra shares, which had slumped by about a third since the March 11 earthquake and tsunami that triggered the Japanese crisis, jumped 26 per cent yesterday to $6.68, which is just short of the revised price.
The revision to the bid has sparked concerns about the prospects for fellow uranium explorer Extract Resources, whose major shareholder Kalahari Minerals is the target of a proposed takeover offer from China Guangdong Nuclear Power.
Extract's shares added 10c yesterday to $8.11, still well below the $10.75 see-through price indicated by the Chinese group's proposed 290 pence per share offer for London-listed Kalahari.
China Guangdong is continuing to seek approvals for its bid, which is likely to be followed by an offer for Extract, the holder of the giant Husab uranium deposit in Namibia. Mantra, owner of the Mkuju River uranium deposit in Tanzania, advised last week that ARMZ was citing the nuclear disaster in Japan as a "material adverse change", meaning the conditions for its December 15 offer could not be met.
The two had since been locked in negotiations on new terms for a deal, now worth $1.02 billion instead of $1.16 billion.
The global slump in uranium shares since the quake has raised expectations of a surge in mergers and acquisitions, driven by nuclear utilities still keen to lock in resources to feed expansion plans.
"Whenever something like this happens it just opens up the opportunity in the market for opportunism, creating an environment where things can be acquired for a price where normally they could not be," said Louis Coetzee, managing director of East African Resources, another Tanzania-focused explorer.
Mantra directors agreed unanimously to recommend the revised offer and will vote in favour of it, in the absence of a higher bid. Mantra's 13.5 per cent shareholder, Highland Park, supports the lower offer.
The revised transaction, due to complete in July, is not subject to any material adverse change conditions.
RBC Capital Markets and Haywood Securities are advising Mantra, while BMO Capital Markets is advising ARMZ.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)