Metallica Minerals Urges Shareholders to Accept Diatreme Resources' Takeover Offer
METALLICA MINERALS LIMITED (MLM) Share Update July 2024 Wednesday 10th
Metallica Minerals Recommends Accepting Diatreme's Takeover Bid
Metallica Minerals Limited (ASX: MLM) has issued its fifth supplementary target's statement, advising shareholders to accept the unconditional takeover offer from Diatreme Resources Limited (ASX: DRX).
Instant Summary:
- Metallica Minerals recommends shareholders accept Diatreme's takeover offer.
- Diatreme holds 82.05% voting power in Metallica Minerals.
- The offer is unconditional and due to close on 23 July 2024.
- Potential delisting of Metallica Minerals from ASX if Diatreme gains 90% control.
- Independent Board Committee (IBC) established to oversee the takeover process.
Background and Current Situation
On 10 July 2024, Metallica Minerals Limited (ASX: MLM) issued its fifth supplementary target's statement in response to the off-market takeover offer from Diatreme Resources Limited (ASX: DRX). The statement advises shareholders to accept the offer, which is unconditional and set to close on 23 July 2024, unless extended.
The Independent Board Committee (IBC) of Metallica Minerals, consisting of Independent Non-Executive Chairman Mr. Stephen Everett and Mr. Brad Sampson, has been established to oversee the takeover process. This committee is responsible for making decisions related to the Diatreme bid, especially in cases where other board members might have conflicts of interest.
Reasons for Recommendation
The IBC has outlined several reasons for recommending that shareholders accept the offer. Firstly, Diatreme's voting power in Metallica Minerals has reached 82.05%, and it has expressed intentions to delist Metallica from the ASX if it gains 90% control. This would mean that shareholders who require liquidity in the short to medium term might prefer to accept the offer rather than hold unlisted shares.
Additionally, the IBC believes that the receipt of consideration from Diatreme under the offer will likely be quicker than through a compulsory acquisition process. There is also no expectation of a competing proposal on more favorable terms.
Board Changes and Voting Power
On 9 July 2024, Metallica Minerals announced the appointment of Mr. Stephen Everett as Independent Non-Executive Chairman and Mr. Greg Starr as Managing Director. The board now includes Mr. Brad Sampson, Mr. Greg Starr, Mr. Michael Chapman, and Mr. Stephen Everett. Diatreme has taken steps to re-comprise the board to reflect a majority of its nominees, effectively controlling the strategic direction of Metallica Minerals.
Given these changes and the potential for delisting, the IBC advises shareholders to accept the offer. Mr. Brad Sampson has already elected to accept the offer for his 534,063 shares, with approval from Mr. Stephen Everett due to the current 'blackout period' in share trading for Metallica directors.
The recommendation to accept Diatreme's offer is likely to have a significant impact on Metallica Minerals' stock. The potential delisting from the ASX and the change in strategic direction under Diatreme's control could affect investor sentiment. Shareholders who require liquidity may find the offer attractive, while those considering long-term holdings should weigh the disadvantages of holding unlisted shares.
Investor Reaction:
Analysts and investors have mixed reactions to the announcement. Some see the acceptance of the offer as a prudent move given the high voting power of Diatreme and the potential for delisting. Others are concerned about the implications of holding unlisted shares and the lack of alternative proposals.
Conclusion:
Investors should carefully consider the IBC's recommendation and the potential impacts on their portfolios. Accepting Diatreme's offer may provide liquidity and avoid the risks associated with holding unlisted shares. Shareholders are encouraged to stay informed and make decisions based on their individual financial situations and investment goals.