In a high-stakes corporate showdown, Perth-based gold miner Perseus Mining has held its ground, refusing to increase its $2.1 billion takeover offer for Predictive Discovery and dismissing a competing merger proposal from Canada's Robex Resources as "inferior".
The Battle for Bankan
The core asset at the centre of this tussle is the promising Bankan gold project in Guinea, West Africa. Predictive Discovery is developing the project, which is estimated to produce an average of about 250,000 ounces of gold annually over a 12-year mine life. Both Perseus and Robex specialise in West African gold operations, making Predictive a highly strategic target.
Last week, Perseus terminated its original scrip offer of 0.136 Perseus shares for each Predictive share. This move came after Predictive's board accepted an upgraded merger proposal from Robex. Perseus's bid valued Predictive at 77.8 cents per share, representing a near 25% premium to Predictive's pre-offer trading price.
Deal Structures: Premium vs. Control
The competing proposals offer starkly different value propositions for Predictive shareholders. While the Perseus offer came with a significant cash-equivalent premium, the Robex merger provides negligible premium but grants Predictive shareholders a majority 53.5 per cent stake in the combined entity. Robex had increased this ownership share from an initial 51% in its revised terms.
Perseus, which is already Predictive's largest shareholder with a 17.8 per cent stake, publicly criticised the Robex deal. In a statement to the ASX on Tuesday, the Subiaco-based company asserted that Robex's upgraded offer "remains inferior" to its own proposal. It pointed to Predictive's share price, which continues to trade at a discount to the value implied by the Perseus bid, as evidence.
Door Shut, But Not Locked
Despite previously leaving the door open for a counterbid, Perseus now appears to be stepping back. The company stated that "in the absence of a change in the likelihood of the success" of the Predictive-Robex merger, it does not intend to submit a revised proposal.
However, Perseus has reserved the right to re-enter the fray, adding a caveat that it could "vary its position or make a further proposal should circumstances change." This leaves a sliver of possibility for the bidding war to reignite should the agreed merger encounter obstacles.
The market reaction was immediate, with Predictive's shares falling 2.1 per cent to 70 cents in early trade following Perseus's announcement, underscoring the perceived value differential between the two offers.
