Genesis Minerals has tabled a binding $5.6 billion proposal to merge with Vault Minerals, setting up a potential takeover battle after Vault’s board determined the offer is superior to its existing merger agreement with Regis Resources.
The proposal would create a $12.6 billion Australian gold producer with annual output of 600,000–700,000 ounces and establish the combined company as the dominant operator in Western Australia’s Leonora-Laverton gold district.
Under the proposed scheme of arrangement, Vault shareholders would receive 0.7629 new Genesis shares plus 47.5 cents in cash for each Vault share held, implying total consideration of $5.2741 per share.
The offer values Vault at approximately $5.6 billion. If completed, Genesis shareholders would own around 59.8 per cent of the enlarged company on a fully diluted basis, while Vault shareholders would hold the remaining 40.2 per cent.
Genesis said the combined group would have a pro-forma market capitalisation of $12.6 billion, mineral resources of 33.6 million ounces, ore reserves of 9.4 million ounces and pro-forma net cash of $611 million. The company also expects the enlarged group to have pro-forma liquidity of $1.3 billion, providing funding capacity for future growth initiatives and shareholder returns.
A key attraction of the proposal is an estimated $2 billion in post-tax synergies, including around $1.5 billion over the next decade that Genesis said would only be achievable through a combination of the two companies.
According to Genesis, those benefits would be driven by the proximity of the companies’ operations around Leonora, where assets are located within 35 km of each other, as well as opportunities across the Bardoc-Mt Monger region and additional operational flexibilities yet to be quantified.
The company said the merger would deliver 100 per cent ownership and control of all operating assets across the Leonora-Laverton gold district, strengthening the scale, quality and liquidity of the business while enhancing its appeal to global investors.
Genesis said its proposal is binding on the company and is not subject to due diligence or financing conditions.
The approximately $500 million cash component of the consideration would be funded through a combination of Genesis’ existing cash reserves and new corporate revolver facilities.
Vault said its board had unanimously determined, acting in good faith and after receiving written advice from its external legal advisers and consulting with its financial advisers, that the Genesis proposal constitutes a “Vault Superior Proposal” under the scheme implementation deed signed with Regis on May 4.
The company said the decision was made in order to satisfy what the directors considered to be their statutory and fiduciary duties.
In accordance with the agreement, Vault has formally notified Regis that it considers the Genesis proposal to be a superior proposal, triggering the five-business-day matching rights process.
Under the terms of the scheme implementation deed, Regis now has the right, but not the obligation, to announce or provide a matching or superior proposal.
The matching period expires at 11.59 pm AWST on July 10. Until that process concludes, Vault cannot enter into a binding agreement with Genesis in relation to the proposed transaction.
Regis acknowledged it had received formal notice from Vault under the matching rights provisions.
The company said it was considering its position and rights under the existing scheme implementation deed.
“Regis is considering its position and rights under the SID,” the company said.
Should the Genesis proposal ultimately proceed, the enlarged company would become one of Australia’s largest listed gold producers, with a stronger balance sheet, expanded production profile and a consolidated footprint across two of Western Australia’s major gold districts.
Genesis also intends to offer Vault shareholders a mix-and-match facility, allowing eligible shareholders greater flexibility in the balance of cash and shares they receive under the proposed scheme.
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