‘Several companies’ interested in Nevsun
Company seeks to avert Lundin’s hostile takeover
TORONTO • Nevsun Resources Ltd. says companies in China, Japan and Western countries are among “several” potential white knights that have expressed interest in buying the miner as it seeks to ward off a hostile takeover by Lundin Mining Corp.
“Several companies have indicated an interest,” Nevsun chief executive Peter Kukielski said Thursday. The potential suitors are a variety of sizes and span the globe. Other parties are interested in acquiring a minority interest, he said.
Vancouver-based Nevsun said earlier on Thursday in a statement it began a strategic review to consider alternatives to Lundin’s hostile takeover bid and urged shareholders to reject that offer. They have until Nov. 9 to tender shares.
“Make no mistake, we will explore all of the alternatives well in advance of the Nov. 9 date and we fully expect a superior alternative to emerge,” Kukielski said in the interview.
Lundin formally launched a hostile takeover bid last month, arguing deep pockets will be required to develop the Timok copper-and-gold project in Serbia and the Bisha mine in Eritrea. Torontobased Lundin has been trying to acquire the company since October.
Under Lundin’s bid, Nevsun shareholders would receive $4.75 in cash for each Nevsun share tended. That represents an 82 per cent premium to the closing price of $2.61 on Feb. 6, the date it first proposed taking over the company. Nevsun shares closed in Toronto at $4.93 on Wednesday, giving it a market value of $1.49 billion.
In addition to undervaluing the portfolio, Lundin’s latest bid is lower than previous transactions it proposed, and also lower “than other alternatives which are expected to emerge,” the company said in the statement.
Kukielski declined to say what he thinks the company is worth, saying its value would “crystallize” over the course of the strategic review. “Maybe it’s worthwhile my pointing out to you that the consensus target price of analysts for Nevsun is C$5.88 a share,” he said.
As of Thursday, the average 12-month target price for Nevsun was $5.62 a share, according to data compiled by Bloomberg.
Nevsun has been looking at financing alternatives for development of Timok since March 2017, and has received four proposals from major and mid-tier mining and smelting companies to buy as much as a 19.9 per cent equity interest in Nevsun, as well as various proposals to partner on Timok’s development. Three of these are at a premium to the per share price offered by Lundin, it said.
“Given the scarcity of quality copper projects in attractive jurisdictions, we continue to believe that Lundin Mining would need to increase its offer to be ultimately successful in its takeover bid,” Farooq Hamed, an analyst at Raymond James, said in a research note. “We note that even with a higher bid from a strategic partner, Nevsun shareholders would still need to consider the mine building and execution risk that an all-cash offer would eliminate; however, we believe there is enough valuation rationale to warrant a higher bid price.”
(LUNDIN) WOULD NEED TO INCREASE ITS OFFER TO BE ULTIMATELY SUCCESSFUL.