Kenmare rebuffs €585m 'opportunistic' Iluka approach
Published 29/06/2014 | 02:30
Kenmare Resources has given a defence mandate to investment bank Rothschild as it prepares to fight off a low ball approach from €2.5bn Australian mining firm Iluka.
RBC, Davy Stockbrokers and McCann Fitzgerald are also working for Michael Carvill's resources firm. Goldman Sachs is advising Iluka.
Kenmare Resources has spent close to $1bn (€1.36bn) and the best part of a decade developing the world's largest dredge ilmentite and zircon mine in Moma in northern Mozambique.
Kenmare – headquartered in a small office above the sportswear shop Great Outdoors in Dublin – is Ireland's biggest stock market-quoted resources company.
It is understood that Carvill and his team have received broad support from its larger shareholders as it rejected the opportunistic bid from Iluka.
The all-share offer would have seen Kenmare shareholders receiving 0.036 new Iluka shares for each Kenmare share they own.
It valued the company at close to €585m.
Kenmare Resources raised close to $100m (€136bn) from investors last year at a price of around 30p per share, which would leave its backers nursing big losses if they were to accept the all-share offer from the Australians.
Shares in Kenmare have slid 70pc over the last year due to over-supply of ilmenite in the markets. Kenmare's largest shareholder M&G has written to the Irish Takeover Panel indicating its rejection of the current Iluka offer.
The M&G Recovery Fund is the largest shareholder in Kenmare, while M&G's Global Natural Resources fund is a large shareholder in ILuka. However, traditionally, M&G funds have competed against each other, according to sources. Blackrock, Capital research and the Norwegian Sovereign Wealth Fund Norges Bank are all big shareholders in the company.
Last week UBS said that it believed that the Iluka bid for Kenmare undervalued the resources company, suggesting that it is worth at least double the amount offered. The approach was described as "slightly opportunistic".
Analysts believe that it is likely that Iluka may return with a higher bid if it wants to buy Kenmare. The rebuttal of its initial approach may see Iluka go hostile and approach Kenmare's shareholders directly rather than seeking approval for a bid from Kenmare's board.
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