Gujarat NRE Coke said on Thursday that its Australian arm has made an off-market takeover offer to acquire all shares of Australia's Rey Resources. Gujarat NRE already holds a 16.6% stake in Rey. Rey holds coal, oil and gas tenements covering large areas of the Canning Basing in Western Australia.
Gujarat NRE Minerals (GNM), its Australian unit, which has two mines in Southern Coalfields of New South Wales, will offer one company share for every five Rey shares. Based on GNM's 5-day volume weighted average price, the implied offer price represents a premium of over 40% to Rev's closing stock price on June 2. Currently, the offer is not for any Rey options.
GNM is in the process of preparing a formal bidder's statement, which will be lodged with the Australian Securities Exchange and the Australian Securities and Investments Commission in due course. Ernst & Young Transaction Advisory Services is acting as lead corporate adviser
GNM was listed on the ASX in July 2007 and has a current market capitalization of $450 million. Currently, its product is shipped via Port Kembla to India and utilized in the production of Coke for use in steel mining.
It recently secured a $50 billion loan to support its mine development activities and expects to receive another $25 million loan in the next few weeks. The company also plans to ramp up production in its mines from 0.8 million tones in the last financial year to 2 million tones this year.
Arun Kumar Jagatramka, chairman of GNM said, " The offer provides Rey shareholders the opportunity to gain exposure to a significantly larger and more diversified coal company with producing mines and the ability to advance the exploration projects of Rey,"
The offer is compelling for Rey shareholders and will be a dramatic value driver for the shareholders of both the companies, it was said. However, Rey said in a statement to the Australian stock exchange that the open offer was unsolicited and advised its shareholders to refrain from taking any action concerning their shares in the company.
On the Bombay Stock Exchange, Gujarat NRE Coke was last trading at Rs.56.60, up nearly 5% from its previous close. Totally, 33.62 lakh shares were traded thus far during the day compared to a 2-week daily average volume of 37.78 lakh shares.
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