Mining services M & A activity

Bridget Carter writes in the excellent 'The Australian' on 19 August 2022:

(subscribing in print and digital to this paper is well worth it):

Mining services provider MACA is set to come out with its arguments on Friday as to why it has rejected NRW Holdings’ $375m cash and scrip offer.

The company told the market on Thursday - the same day as it delivered its full year results - that it approached MACA on August 11 with a merger proposal which would value MACA’s shares at $1.085 each.

It came as both companies entered a trading halt on Thursday following reports by DataRoom online that NRW had been weighing a proposal to buy the business.

The offer was subject to conditions such as two weeks’ due diligence and financing.

MACA is set to tell the market on Friday that it is inferior to the current all cash takeover bid from Thiess at $1.025 per share, or $350m.

With the NRW offer, MACA shareholders would be on the hook for NRW scrip for an extra four months, and looking at NRW’s share price over a three-month period, the offer works out to be less than what is currently on the table from Thiess.

NRW, which is advised by Jarden and Longreach Capital, said it had received a letter of interest to underwrite an acquisition finance facility from its lenders.

It held the view that its offer warranted further investigation by MACA, despite NRW saying it did not propose to engage in further talks.

“We are disappointed that the board of MACA has indicated that it is not willing to entertain our compelling proposal,” NRW managing director Jules Pemberton said.

“NRW believed it was uniquely positioned to offer attractive value for all MACA shareholders, and, importantly, the benefits of continued exposure to MACA’s business as part of a larger and diversified provider of contract services to the resources, infrastructure and energy sectors across Australia.”

NRW’s offer involves shareholders receiving all cash, all scrip at 0.48 NRW shares for each MACA share or half cash and half scrip.

The value of the bid is based on the NRW share price at $2.26 per share, the day before the presentation of the merger proposal to MACA’s board.

The offer is a premium of 35.6 per cent premium to the undisturbed closing price of 80c per share on July 25, a 5.9 per cent premium to the Thiess takeover price of $1.025 per share and a 45.7 per cent premium to the three-month volume weighted average price of 74c per share to July 25.

It is subject to a maximum of cash paid being $188.6m or 83.4 million NRW shares and cash and scrip will be scaled back accordingly.

MACA shares last traded up 1 per cent to $1.01 and NRW last traded at $2.38, up 6.25 per cent.