Rival slams MIM board over takeover April 17 2003 By James Chessell Sydney
MIM managing director Vince Gauci has found a friend in the influential Platinum Asset Management, which yesterday became the first large shareholder to publicly criticise Xstrata's $4.9 billion bid for the Queensland miner.
While several institutions have privately questioned the Swiss group's $1.72 a share offer, Platinum, which holds just under 3 per cent of MIM, described the bid as "very opportunistic" and MIM's board as "jellyfish".
"Our view is that the bid doesn't represent the long-term value of MIM," said Platinum investment analyst Scott Gilchrist. "Xstrata are almost gloating about what they are paying.
"We really like what Vince and his team have done to turnaround the company. The work that guys like John Gooding (Mt Isa), Brian MacDonald (coal), Mike Menzies (mining) and Charlie Sartain (South America) have done has been great."
Earlier this month, MIM's board recommended shareholders accept Xstrata's controversial takeover proposal despite the managing director opposing the deal.
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Mr Gilchrist joined Mr Gauci by arguing the offer did not adequately reflect the "long-term value" of MIM's core operations and growth initiatives. Platinum believes that, depending on commodity prices, MIM could be worth between $2.50 and $3 in "three to five years' time".
This is well above an independent expert valuation range of $1.70 to $2.24 commissioned by the MIM board from advisory house Grant Samuel.
Mr Gilchrist was particularly disappointed with the board, led by chairman Leo Tutt, which agreed to the $1.72 price and accepted a scheme of arrangement, rather than a straight takeover offer.
"They have gone for near-term certain value but that is not what this world is about. They should believe in the management and that they can grow this company in the years ahead." he said. "The board has been spineless, a bit like jellyfish".
Other large shareholders are awaiting the release of the information memorandum containing the expert's report, the board's recommendation and Mr Gauci's argument later this month before deciding. The offer goes to a vote in early June.
Xstrata chief financial officer Trevor Reid 's admission after the offer that the Anglo-Swiss group had not included MIM's copper and zinc growth projects, or the expected $US45 million in annual synergies, in its valuation has concerned some investors.
Mr Gilchrist said the offer did not consider the planned expansion of the McArthur River zinc mine using MIM's new processing technology.
