gujarat nre eyes rey resources in hostile bid

http://economictimes.indiatimes.com/News/News-By-Industry/Gujarat-NRE-eyes-Rey-Resources-in-hostile-bid/articleshow/4619133.cms

AHMEDABAD: In a bid to broad-base company activities and access new coal resources, Gujarat NRE Minerals (GNM), the Australian subsidiary of Gujarat NRE Coke, is aiming to acquire an Australian Securities Exchange (ASX)-listed company Rey Resources.


On Thursday, GNM made an off-market takeover offer to the shareholders of Rey Resources to acquire all the shares issued by the target company.

GNM, the largest shareholder having close to 17% stake in Rey Resources, has offered one GNM share for every five shares of the company.


Rey Resources directors and management holds 20% equity in the company. Australian investment management firm Acorn Capital holds 8% stake in Rey Resources. However, opposing the ¡°unsolicited¡± takeover bid, Rey Resources recommended that its shareholders ¡°take no action¡± concerning their shares in the company, an agency report said.

In a prompt reaction to the hostile takeover offer by GNM, Rey Resources called the move ¡°unsolicited¡± and recommended its shareholders to ¡°take no action¡± concerning their shares. Meanwhile, Gujarat NRE vice-chairman and managing director Arun Jagatramka resigned from the board of Rey Resources to facilitate the acquisition process. Rey Resources¡¯s alternate director Mihir Dave, too, resigned from the company.

Mr Jagatramka was a non-executive director on the board of Rey Resources since June 2006. During the trading sessions on Thursday after the announcement of takeover bid, Gujarat NRE scrip rose 5% to Rs 56.80 on BSE.

¡°GNM has made ¡®all share no cash offer¡¯ and, hence, it will not have to fund the acquisition. GNM will issue fresh shares for the Rey Resources shareholders,¡± Gujarat NRE CFO PR Kannan told ET. It is learnt that GNM will issue fresh shares having market value of close to A$15 million for the acquisition purpose. GNM¡¯s number of shares will increase by close to 2%, while its promoters will dilute their holding marginally as part of the deal.


The acquirer has roped in Ernst & Young Transaction Advisory as lead corporate adviser for the offer. According to Gujarat NRE officials, Rey Resources shareholders will get about 40% premium as per the average pricing mechanism.

In a media statement by Gujarat NRE Mr Jagatramka said: ¡°The takeover of Rey provides an access to additional 500 MT of thermal coal resources and coal gas methane and establish the group as a complete coal resources company and enhance its overall value.


GNM¡¯s board is confident that putting the GNM assets together with Rey assets and potentially realising the upside offered by the combined group with its exposure to the Indian coal markets, will be a dramatic value driver for the shareholders of Rey and GNM.¡±