Universal Coal (UNV) 19.5c In its whirlwind local roadshow, the South African coalminer need only point to its shares to convince investors not to accept German-Dutch mob IchorCoal’s hostile offer.
Universal’s market price has well exceeded Ichor’s 16c a share entreaty, with independent expert KPMG valuing the stock at 26c-34c a share.
There’s a good chance this one will turn into a ding-dong three-way tussle, with another party linked to the South African coal industry offering a non-binding 20c a share.
Management is also chatting to yet another putative bidder with local connections.
The interest comes as the coal industry globally fights for its existence, both in an economic and PR sense.
Universal chief Tony Weber has long argued that South Africa is 90 per cent coal-dependent for power generation and this won’t change overnight.
Output from Universal’s initial Kangala mine is contracted to the state-owned utility Eskom on a take-or-pay basis. Its second project, the acquired New Clydesdale Colliery, is also subject to an Eskom contract ahead of expected start-up by December.
Ichor’s starting point is a 29.9 per cent Universal stake, so in theory could block a rival offer. But it’s doubtful whether Ichor could afford to hang around as a minority holder.
A point of intrigue is whether BHP Billiton offshoot South 32, which owns nearby underperforming coal assets, would be willing to pay up big for Universal’s assets in a ‘‘get bigger or get out’’ push.
Whatever the case, we could swear there’s an easy 20-25 per cent short-term gain with Universal. Spec buy.
The Australian accepts no responsibility for stock recommendations. Readers should contact a licensed financial adviser. The author does not have an interest in the stocks mentioned. http://www.theaustralian.com.au/bus...r-takeover-offer/story-e6frg9lo-1227579132569
UNV Price at posting:
19.5¢ Sentiment: Buy Disclosure: Not Held
