Mineral Deposits Limited (ASX: MDL) released its first supplementary target’s statement in response to the off-market takeover bid by Eramet SA (Eramet). The latest Offer indicated price for shares in MDL at A$1.75 cash per share. It has been highlighted that Eramet has been able to grasp an interest of about 43.41% of the issued capital of MDL as announced by latter under a Notice of change of interests of substantial holder on July 10, 2018. Hence, Eramet now has the single, largest shareholding while the stake is still lower than 50%. Given this enhanced interest, MDL Directors have also given regard to the fact that, Eramet now seems to be in a position to take full charge of MDL. These two groups have been under a long term partnership for managing TiZir.
MDL’s statement now highlights that the Directors had previously recommended the Shareholders to reject the initial offer made in May 2018, and with this Eramet enhanced the offer from A$1.46 per share to A$1.75 per share in the month of June 2018. Given the uncertainties on Eramet’s controlling stake in MDL, the shareholders now have the certainty to receive A$1.75 per share in cash and this has been spotted to be attractive given the past performance of the share. The inherent gap in Eramet’s initial Offer has now been removed, and it has been made unconditional. With acceptance of the Offer by shareholders, Eramet will be paying the cash consideration to the ones in a timely manner without much delay.
Eramet’s Offer is currently scheduled to close on 13 July 2018 unless it is extended further which looks unlikely as per the statements made by it in terms of finality of the offer. Eramet’s Offer will be automatically extended by law so that it will close 14 days after the day that Eramet’s interest in MDL increases to above 50%.
It is worth noting that MDL has not paid a dividend since it commenced trading as MDL on the ASX in 1999 and has also not reported an annual net profit for more than five years now. Eramet has increased its interest in MDL by only 20,895 shares representing 0.01% of MDL shares on issue, since opening its Offer on 14 May 2018. The offer was substantially below replacement cost of the joint venture's capital equipment and the Group’s decision to sell a small part of its holding was a portfolio management decision.
Mineral Deposits Limited (ASX:MDL) is currently trading at a current market price of $1.750 which is very near to its 52 - week high and matching with the offer price. The stock has seen a change of staggering 136.49% over the past 12 months as at July 10, 2018. The understanding is that L1 capital has put its 17.95 percent stake in the institutional acceptance facility, and the decision to accept into the facility has made it clear about what the shareholders of Mineral Deposits think the company is worth. Given the Eramet’s updated offer statistics and MDL’s evaluation, the board of the company has now given a green signal to accept the offer. In case, Eramet seeks for more than 50% of voting power in MDL, the latter will be removed from ASX. This gives out a chance to the shareholders to seek profits on MDL given the trading scenario.
