Reservoir Minerals Inc. shareholders voted to accept a takeover bid by Nevsun Resources Ltd. after the acquirer sweetened the bid in the final hours before a meeting to approve the deal.
Vancouver-based Reservoir received over the two-thirds of shareholder votes to support the offer, Non-Executive Chairman Miles F. Thompson said Friday at a special company meeting in Vancouver.
Late Thursday Vancouver time, the two companies announced Nevsun would increase its offer for Reservoir by C$2 ($1.55) a share, effectively increasing the original bid by $75 million. The initial stock and cash offer announced in April was for the equivalent of $365 million.
The result of Friday’s vote was in question following a public battle with dissident shareholders. A group including Jing Bao (Asia) Ltd. and Shandong Xiangguang Group Co. had fought against the takeover on the grounds that it undervalued the company’s stake in the Timok copper and gold project in Serbia.
Timok Ownership
The vote helps settle questions about control of Timok. Until recently, the project was majority-owned and operated by Freeport-McMoRan Inc., in partnership with Reservoir. In March, Freeport announced it was selling a portion of its stake to Lundin Mining Corp. for as much as $263 million. However, Lundin Mining was shut out of the deal a month later when Reservoir exercised its right of first refusal on the asset. Reservoir acquired the stake instead, with funding from Nevsun, as part of the larger merger arrangement.
In a separate vote Friday in Vancouver, Nevsun shareholders approved the issuance of shares to Reservoir.
In an interview last week, Nevsun Chief Executive Officer Cliff Davis warned that if the merger was rejected, Reservoir would likely struggle to meet its cash commitments to Nevsun and would also need to seek fresh funds to move Timok forward. “They would be in a significant financial overhang with respect to what their cash requirements are,” Davis said.
By: Natalie Obiko Pearson & Danielle Bochove (Bloomberg).
Photo: Midas Letter.
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