The board of ASX-listed mineral sands miner Mineral Deposits Limited (MDL) has urged investors not to accept an “opportunistic” takover offer from French multinational Eramet, which values MDL at $291 million.
Paris-headquartered mining and metallurgical firm Eramet on April 27 lobbed a $1.46 per share bid for 100% of Mineral Deposits, after buying a 13.3% stake in the company from a selection of large existing shareholders.
The takeover offer represented a 26% premium on the last closing price of MDL shares, a 33% premium on the shares’ one-month volume-weighted average price (VWAP), a 30% premium on the three-month VWAP, and a 37% premium on the six-month VWAP.
Eramet and Mineral Deposits are 50:50 partners in the TiZir joint venture, which operates an integrated mineral sands business in Senegal and Norway, producing titanium dioxide and zircon.
“We are convinced that our offer is a unique opportunity for MDL shareholders,” Eramet chief executive Christel Bories said.
Bories said the move would be a logical step for Eramet to consolidate ownership of TiZir, which he says “would be best placed being wholly-owned within a larger, diversified portfolio such as Eramet’s”.
While some major Mineral Deposits shareholders have reportedly agreed to sell their stakes to Eramet, the company’s board did not endorse the offer.
“MDL views the offer as highly opportunistic,” the company said on April 27.
“It takes advantage of sharply improving commodity prices and improved operational and financial performance of the TiZir joint venture. In doing so, the offer denies MDL shareholders the opportunity to realise what MDL considers to be the true value of their investment.”
Moreover, according to the Australian Financial Review, several key external shareholders agree Eramet’s offer is not valuable enough.
“I am very supportive of the company, we have no intention of supporting the first offer that comes along,” shareholder Thorney Investments portfolio manager John Cathcart was quoted as saying.
“Mineral Deposits has put their foot on a strategic resource, they have spent the capex, they are just coming into production, they are producing into a serious market and the bid from Eramet is opportunistic.
“The structural dislocation in the mineral sands area, in ilmenite and zircon, has been well recognised by Thorney Investments as an area where there is not a lot of supply, it is controlled by Rio Tinto out of Richards Bay, and this is one of the few independent, Australian-listed companies that you can buy and that is why the takeover bid has occurred.”