French multinational mining and metallurgy company Eramet has made an off-market takeover bid for the acquisition of all of issued shares in Mineral Deposits (MDL) for a sum of A$291m ($220.15m).
Eramet and MDL currently own a joint 50% interest the TiZir integrated mineral sands business in Senegal and Norway.
The proposed transaction is intended to help Eramet to fully consolidate its ownership of the TiZir joint venture (JV) within its asset portfolio.
Eramet has also acquired a 13.3% interest in MDL from some of the company’s largest shareholders in support of the acquisition.
Eramet chairman and CEO Christel Bories said: “The offer provides certainty of value at a genuinely attractive cash price for MDL shares.
“For Eramet, this is a logical step in line with the group’s strategy that consolidates the ownership of the TiZir asset within its portfolio at a time when the Group has improved financial flexibility.
“Given the nature of TiZir and the mineral sands industry, we believe that the TiZir asset would be best placed being wholly owned within a larger, diversified portfolio such as Eramet’s.”
The company proposes to grant MDL shareholders A$1.46 ($1.1) per share for their holding in the company as part of the deal.
Eramet noted that the offer will provide cash certainty to MDL shareholders during the current period of volatility within mineral sands markets.
The company also claims that MDL has limited trading liquidity and has not registered an annual net profit in more than five years.
In addition, MDL shareholders are taking into consideration the fact that MDL has not paid a dividend since it originally commenced trading on the ASX in 1999.
In response to the takeover bid, MDL labelled the proposal as ‘highly opportunistic’, accusing Eramet of using the offer to capitalise on improving commodity prices and the ‘improved’ operational and financial performance of the TiZir JV.
In a statement, MDL stated: “The offer denies MDL shareholders the opportunity to realise what MDL considers to be the true value of their investment.
“That Eramet, a partially French government-owned corporation and trusted joint venture partner in TiZir, did not approach MDL before announcing its offer and has elected to pursue a hostile transaction supports MDL’s view of the opportunistic nature of the offer.”
The directors of MDL have called on the shareholders to refrain from taking action in connection with the offer.