THE BOURSE WHISPERER: Independence Group (ASX: IGO) rattled the boards of the ASX by announcing its intention to make an off-market takeover offer to acquire all of the ordinary shares of Panoramic Resources (ASX: PAN) it does not already own.
At the date of the announcement, Independence Group’s interest in Panoramic consisted approximately 24.9 million shares, representing approximately 3.8 per cent of the target company’s total issued capital.
IGO explained it opted to directly engage Panoramic shareholders following a number of unsuccessful attempts to engage with the Panoramic Board on a change of control transaction.
The company cited Panoramic’s recent operational performance and the lack of engagement from Panoramic’s Board to date as the impetus behind the offer.
The conditions to the offer include a number of conditions that IGO believes to be necessary to confirm the current status of operating performance at Savannah.
The offer is in the form of one IGO Share for every 13 Panoramic shares held, giving Panoramic a share price of 47.6 cents per Panoramic share, which values the company at around $312 million.
IGO indicated its preference is to conduct an expedited and thorough due diligence process, and to proceed with a recommendation from the Panoramic Board rather than seek the confirmations required under the offer conditions, however IGO said it is prepared to see the offer to completion should the offer conditions be satisfied.
“The Offer represents a rare instance of genuine and obvious mutual benefit for both Panoramic and IGO shareholders,” Independence Group managing director and CEO Peter Bradford said in the company’s announcement to the Australian Securities Exchange.
“Panoramic shareholders will be able to crystallise future value from Savannah at a very attractive price and retain exposure to its upside potential, while also gaining exposure to Nova and Tropicana and IGO’s extensive portfolio of belt-scale exploration projects prospective for nickel and copper.
“The company remains leveraged to the nickel market and we believe IGO has the financial, operational and technical capability to fully unlock value from Savannah and Panoramic’s exploration portfolio.
“Given our unique positioning as Australia’s largest independent producer of nickel, to unlock value at Savannah, we have decided to provide the offer for the consideration of all Panoramic shareholders.”
I response, Panoramic did nothing to surprise anybody by recommending its shareholders take no action in relation to the IGO takeover offer.
“The Board will evaluate the offer and Independence Group’s Bidder’s Statement and provide shareholders with a recommendation in due course,” Panoramic Resources said.
“Until then, shareholders should take no action.”