Kolkata: The Australian unit of coking coal maker Gujarat NRE Coke Ltd, Gujarat NRE Minerals Ltd, announced on Thursday an unsolicited take-over bid for minerals explorer Rey Resources Ltd.
Gujarat NRE Minerals said it would issue one share in itself for every five held in Rey, valuing the latter at around Australian $138 million (around Rs530 crore).
The firm said in a release that its offer values Rey’s shares at 9 Australian cents apiece, which is 40.6% higher than the price at which it was last traded on Wednesday.
Gujarat NRE Minerals said in a stock market filing that its bid would fall through if it fails to acquire a minimum of 90% equity stake in Rey.
If Gujarat NRE Minerals gets 90% of Rey’s shares, it would under Australian law automatically gain control of the remaining 10% for which it would pay cash and not issue shares.
The price of Rey’s shares jumped 64% to close at 12 Australian cents on the Australian Securities Exchange (ASX) on Thursday.
Gujarat NRE Minerals’ shares, also listed on ASX, advanced 7% to close at 56 Australian cents.
Gujarat NRE Coke’s shares rose 5% to close at Rs56.80 on the Bombay Stock Exchange, on a day its benchmark Sensex index gained 1%.
Gujarat NRE Minerals already owns 16.6% in Rey, a five-year-old company, which says it has proven coal reserves of 500 million tonnes in Western Australia.
Rey is also exploring for gold and copper in Peru and Chile.
Commercial production in Australia, however, is unlikely to start until at least two-three years later, Gujarat NRE Coke’s chief financial officer P.R. Kannan said.
Rey’s assets in Canning Basin is expected to yield oil and gas as well, Gujarat NRE Minerals said in its release.
“We were cornerstone investors in Rey. We had acquired 19.9% through a private placement a few years ago... Our holding got diluted when the company placed more shares later with other investors,” Kannan said.
Arun Kumar Jagatramka, chairman of Gujarat NRE Minerals, was a director on the board of Rey until Wednesday. He stepped down a day before his firm unveiled its unsolicited bid for Rey’s 153 million shares.
“The directors of the company recommend that shareholders take no action concerning their shares...(until) further advice from the company,” Rey said in a release to ASX.
Kannan said his company was hopeful that the directors of Rey would eventually support the bid though they were not consulted before the bid was announced.
“A decision would be taken by the directors of Rey after we have sent bidder’s document to all shareholders,” he said.
Gujarat NRE Minerals, which is 82%-owned by Gujarat NRE Coke, operates two coal mines in New South Wales. The company says it is one of the largest producers of coking coal in Australia.