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Caledon Resources agrees to Chinese takeover bid at 34% premium

Monday, November 08, 2010

The takeover bid is at a 53% premium to Caledon's 20 trading day average price Caledon Resources (LON:CDN, ASX:CCD) has agreed to be acquired by Guangdong Rising Assets Management at a huge premium to its current market value.

The offer from the Chinese state owned investment firm values the Australian coking coal producer at GPB251.6 million, or a 34% premium to its closing price of 83.75 pence on 5 November and a 53% premium to its volume weighted average price of 73.16 pence for the 20 trading day period to 5 November.
Shares in Caledon jumped 22.5% in morning trade after the agreement in principle was announced.

"We believe the proposed acquisition of Caledon would be positive for our shareholders and our employees."

"If the acquisition proceeds, Caledon Shareholders and CDI Holders would receive, in cash, a very significant premium to Caledon's recent share price and GRAM's commitment to growing the business would provide our employees with the opportunities that come with being part of a much larger organization," said managing director of Caledon Resources Mark Trevan.
It's also notable that such a substantial premium is to a share price that has already been inflated by intense takeover speculation and talks with several would-be bidders.

In mid-September, Caledon announced a takeover approach, driving its shares up 15%.

A month earlier, the group broke off talks with would-be bidders.
In July Caledon told investors it received "a number of unsolicited and indicative enquiries from third parties in respect of possible alternative transactions".

At that point the company described negotiations at being at an "early stage", though one of the putative offers placed a price tag on the business of 68 pence a share, or GBP153 million.

GRAM expects to satisfy or waive the pre-conditions, which include the unanimous recommendation of the board of Caledon and the receipt of all necessary approvals from regulatory authorities in China, not later than 31 December 2010.

The directors of Caledon have indicated that they are supportive of the possible acquisition. Caledon has advised shareholders that there is no certainty that a formal offer for Caledon by GRAM or its wholly owned indirect subsidiary Bidco will be forthcoming, even if the pre-conditions are satisfied or waived.

Caledon"s flagship project is the formerly mothballed Cook mine in Queensland it bought in 2006.

In 2009, Caledon mined 604,000 tonnes of coal from Cook, up from 548,000t in 2008. The latest figures show the group's raw coal production from operation rose 35 per cent to 174 million tonnes of raw coal in the three months to the end of June.

Caledon has targeted saleable output of 700,000 tonnes this year.
The group is currently carrying out a feasibility study on the neighbouring Minyango prospect, which it also bought back in 2006, which has a JORC compliant resource of 342 million tonnes.

GRAM has investments in a range of listed and unlisted entities across a wide range of sectors, including non-ferrous metals, technology, hotels and construction.

GRAM has recently been active in the mining sector having acquired a 19.9% interest in PanAust Limited, an ASX listed copper and gold mine operator for A$215 million in 2009.

Link:http://www.proactiveinvestors.com.au/companies/news/11509/caledon-resources-agrees-to-chinese-takeover-bid-at-34-premium-11509.html