News: Avoca merger poorly received

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Avoca Resources Ltd (ASX:AVO) will need to convince the market of the benefits of its newly announced US$2 billion merger with Canadian company Anatolia Minerals Development, following Avoca shares reacting with a 14 cent drop yesterday.

Under the proposal Avoca shareholders will receive 0.4453 common shares of Anatolia for each Avoca share they hold.

But the merger of equals announcement from Avoca was not received well, with speculation that Avoca's sacrifice for the merger is greater than its partners.

According to the Australian Financial Review Avoca CEO Rohan Williams has refuted claims that its major shareholder Pala Investments was a chief player in tying up the merger.

Adding that Mr Williams has advised its investor very much sat on the sidelines, allowing both himself and Anatolia CEO Ed Dowling to ink the merger deal.

Avoca Resources posted a profit of $57.78 million in fiscal 2010.