Nevsun Resources Ltd. says companies in China, Japan and Western countries are among potential white knights that have expressed interest in buying the miner as it seeks to ward off a hostile takeover by Lundin Mining Corp.
“Several companies have indicated an interest,” Nevsun Chief Executive Officer Peter Kukielski said Thursday in a phone interview. The potential suitors are a variety of sizes and span the globe. Other parties are interested in acquiring a minority interest, he said.
Vancouver-based Nevsun said earlier on Thursday in a statement it began a strategic review to consider alternatives to Lundin’s hostile takeover bid and urged shareholders to reject that offer. They have until Nov. 9 to tender shares.
“Make no mistake, we will explore all of the alternatives well in advance of the Nov. 9 date and we fully expect a superior alternative to emerge,” Kukielski said in the interview.
Deep Pockets
Lundin formally launched a hostile takeover bid last month, arguing deep pockets will be required to develop the Timok copper-and-gold project in Serbia and the Bisha mine in Eritrea. Toronto-based Lundin has been trying to acquire the company since October.
“Although we are disappointed that the Nevsun board of directors has rejected our offer, we are pleased to see the board has now begun a strategic review process to consider and evaluate a sale of the entire company,” Marie Inkster, Lundin’s chief financial officer and incoming CEO, said Thursday in an emailed response to Nevsun. “We trust that Nevsun will allow its shareholders a full opportunity to evaluate Lundin Mining’s offer, and other offers for the company as a whole, without disruption of a pre-emptive minority strategic investment or other dilutive transaction.”
Under Lundin’s bid, Nevsun shareholders would receive C$4.75 ($3.64) in cash for each Nevsun share tended. That represents an 82 percent premium to the closing price of C$2.61 on Feb. 6, the date it first proposed taking over the company. Nevsun shares closed in Toronto at C$4.93 on Wednesday, giving it a market value of C$1.49 billion.
Target Price
In addition to undervaluing the portfolio, Lundin’s latest bid is lower than previous transactions it proposed, and also lower “than other alternatives which are expected to emerge,” Nevsun said in its statement.
Kukielski declined to say what he thinks the company is worth, saying its value would “crystallize” over the course of the strategic review. “Maybe it’s worthwhile my pointing out to you that the consensus target price of analysts for Nevsun is C$5.88 a share,” he said.
As of Thursday, the average 12-month target price for Nevsun was C$5.62 a share, according to data compiled by Bloomberg.
On Thursday, Nevsun rose 0.4 percent to close at C$4.95 in Toronto.