- Breaker Resources NL (ASX: BRB) on Monday announced that Ramelius Resources Limited (ASX: RMS) has offered to acquire the company.
- According to the conditions of the offer, BRB shareholders would receive an implied offer price of AU$0.40 per share.
- As per the indicative timetable, the offer would open on 24 March this year and end on 24 April 2023 unless extended.
Gold and copper explorer Breaker Resources NL (ASX: BRB) shares zoomed by 29.310% to close at AU$0.375 on Monday, 20 March, after the company updated that Ramelius Resources Limited (ASX: RMS), one of the top ten gold producers in Australia, has offered to acquire it through a recommended all-scrip off-market takeover offer.
Breaker Resources owns 100% stake in Western Australia-based Lake Roe Gold Projects, which has a total mineral resource of 32 Mt @1.6 gram/tonne for 1.7 million ounces. Lake Roe delivers further scale via regional consolidation with RMS’ Rebecca project, which has nearly 3 million ounces in mineral resources, to back a prospective new production centre.
Let’s scan through RMS’ recommended takeover offer for BRB.
As per the terms and conditions of the offer, BRB shareholders would receive one RMS security for every 2.82 BRB shares owned by them. This represents an implied offer price of AU$0.40 for every BRB share.
The offer price denotes premiums of 41% to BRB’s three-day volume-weighted average price of AU$0.284 a security, 41.7% premium to BRB’s ten days volume-weighted average price of AU$0.282 a security.
The offer price implies a total undiluted equity value of AU$130.7 million for BRB.
As per the indicative timetable, the offer would open on 24 March this year and will end on 24 April 2023 unless it is extended.
BRB’s board and major stakeholders back the offer
The directors of BRB have collectively advised that BRB stakeholders accept the offer if there is no superior offer. Also, BRB directors have approved the statement of intent to accept the offer of all securities they hold or control, which is around 4% of BRB’s issued securities, in the absence of a superior offer.
Further, the two biggest stakeholders of BRB--Electrum Strategic Opportunities Fund and Paulson & Co, together with a shareholding of around 19.92%--have backed the offer by inking pre-bid agreements to accept within five business days of the opening of the offer in the absence of a superior offer.
Benefits for BRB shareholders
BRB shareholders, other than receiving a significant premium for BRB shares, will also benefit from extended and improved economic development setting as Lake Roe Project is close to the Rebecca Project of RMS, which has operational experience as well as exploration capabilities to accelerate Lake Roe project development together with Rebecca.
Ramelous’ strategic rationale for the offer
The acquisition of BRB is in accordance with RMS’ goal to implement synergistic corporate prospects to improve the progress of a new production hub after the complementary acquisition of Apollo Consolidated Limited and its Rebecca (flagship project) concluded last year.
About the bid implementation agreement
As per the bid implementation agreement dated 20 March this year, RMS and BRB have provided undertakings to each other to facilitate this offer. However, the offer is contingent on a few terms and conditions, like a minimum acceptance of 50.1% by BRB shareholders.
There should be no prescribed occurrences with respect to BRB. There should be no unfavourable material change pertaining to either BRB or RMS. Further, no unfavourable regulatory event should impact the offer, BRB or its assets. BRB should not breach the conduct of the business restrictions or BRB warranties in BIA.