In a bid to broad-base company activities and access new coal resources, Gujarat NRE Minerals (GNM), the Australian subsidiary of Gujarat NRE Coke, is aiming to acquire an Australian Securities Exchange (ASX)-listed company Rey Resources. On Thursday, GNM made an off-market takeover offer to the shareholders of Rey Resources to acquire all the shares issued by the target company.
In a prompt reaction to the hostile takeover offer by GNM, Rey Resources called the move “unsolicited” and recommended its shareholders to “take no action” concerning their shares. Meanwhile, Gujarat NRE vice-chairman and managing director Arun Jagatramka resigned from the board of Rey Resources to facilitate the acquisition process. Rey Resources’s alternate director Mihir Dave, too, resigned from the company. Mr Jagatramka was a non-executive director on the board of Rey Resources since June 2006. During the trading sessions on Thursday after the announcement of takeover bid, Gujarat NRE scrip rose 5% to Rs 56.80 on BSE.
“GNM has made ‘all share no cash offer’ and, hence, it will not have to fund the acquisition. GNM will issue fresh shares for the Rey Resources shareholders,” Gujarat NRE CFO PR Kannan told ET. It is learnt that GNM will issue fresh shares having market value of close to A$15 million for the acquisition purpose. GNM’s number of shares will increase by close to 2%, while its promoters will dilute their holding marginally as part of the deal. The acquirer has roped in Ernst & Young Transaction Advisory as lead corporate adviser for the offer. According to Gujarat NRE officials, Rey Resources shareholders will get about 40% premium as per the average pricing mechanism.
In a media statement by Gujarat NRE Mr Jagatramka said: “The takeover of Rey provides an access to additional 500 MT of thermal coal resources and coal gas methane and establish the group as a complete coal resources company and enhance its overall value.
GNM’s board is confident that putting the GNM assets together with Rey assets and potentially realising the upside offered by the combined group with its exposure to the Indian coal markets, will be a dramatic value driver for the shareholders of Rey and GNM.”
It may be mentioned here that Rey Resources was planning to complete pre-feasibility and environment studies this year also secure port access. Rey Resources was aiming to start production and first export in 2012. According to unconfirmed reports, Rey Resources was considering to acquire stake in a facility at the Derby port.
Gujarat NRE is the largest independent producer of met coke in India and is the only Indian company with coking coalmines in Australia having more than 500 MT of metallurgical coal with coking properties. The company is also aiming to emerge as one of the largest coking coal producers in Australia in coming days. Proposed acquisition will strengthen company’s presence in Australia.
Overseas Acquisitions:
* In May 2007, Sun Pharma acquired Israel’s Taro Pharmaceuticals Industries for $ 454 million ( Rs 1861) in all-cash deal.
* In 2007, Dishman announced the takeover of Netherland-based Solvay Pharmaceuticals for an undisclosed amount.
* In 2008, Zydus made a foray into Spain with the acquisition of Laboratorios Combix and also acquired majority stake of 70% in Simayla Pharmaceuticals of South Africa.
FACTFILE of Rey Resources:
– Rey Resources holds mineral exploration leases covering large areas in the Canning Basin in Western Australia.
– Rey Resources has two petroleum Exploration Permits that overlap its coal leases. Rey Resources is into a farm-out arrangement with Gujarat NRE Mineral Resources
– Rey Resources’ South American portfolio comprises projects in Chile and Peru for copper and gold.
