China's Cathay Fortune goes hostile with A$830-mn bid for Australian miner
25 October 2012
In an unusual move, Chinese private equity firm Cathay Fortune Corp and China-Africa Development Fund (CADF) have launched a hostile takeover bid valued at around A$830 million ($860 million) to acquire all of the outstanding shares of Botswana-focused Australian copper miner Discovery Metals Ltd.
The Chinese investment firm controlled by billionaire Yu Yong said yesterday that it would approach Discovery's shareholders directly with the bid after a failed attempt to win support for it's A$1.70 per share offer from Discovery's board.
The offer represents a 51-per cent premium to the weighted average share price of Discovery over the 30 days prior to the indicative offer being made public. It is also 42 per cent above the A$1.20 price at which Discovery issued new shares to institutional investors in August to raise A$50 million.
This is apparently the first time a large Chinese group has gone hostile with an Australian mining company without the support of the company's board of directors.
The offer is made by the Cathay Fortune Investment Fund, a joint venture which will be 75 per cent owned by Cathay Fortune Corp and 25 per cent by CADF.
"Our offer represents compelling and certain value at an attractive premium," Yu Yong said.