An independent report has described Calipso Investment’s unsolicited takeover offer for Herald Resources as “neither fair nor reasonable.”
Calipso, a wholly-owned subsidiary of Indonesian-miner PT Bumi Resources, launched the 70 cent per share takeover bid on 21 August.
Calipso currently holds 84.3% of the company’s shares.
At the time, Herald’s independent directors urged shareholders to reject the offer, calling it opportunistic.
The report, compiled by Lonergan Edwards & Associates, found that Herald’s shares had a value between $1.07 and $1.44 and a mid-point of $1.25, nearly 80% higher than the offer price.
The analysts also valued Herald’s 80% interest in the Dairi project in North Sumatra at between $240 million and $320 million.
Herald independent director Andrew Wilson repeated the recommendation that shareholders reject the offer.
“The bid would deprive shareholders of the upside value in the world-class Dairi project once Indonesian Government Approvals for the project are given,” he said.
“The Lonergan Edwards valuation confirms that the offer is inadequate and supports our view that it must be substantially increased, particularly as Calipso offered $2.85 only 14 months ago.
“That is more than four times the current offer.
“Importantly, Lonergan Edwards has also concluded that the Herald share price prior to the announcement of Calipso’s offer is not ‘an appropriate reference point’ to assess the offer due to the low level of liquidity in the shares.”
The directors yesterday released a target’s statement, outlining the report findings in detail and the reasons behind their recommendations.