Flinders shareholders urged not to take action on ‘undervalued’ Todd offer

PERTH (miningweekly.com) – The directors of takeover target Flinders Mines on Friday told shareholders that the takeover offer from New Zealand’s Todd Corporation had undervalued the company by more than A$26.8-million.

Todd last month launched a takeover offer for Flinders Mines, offering shareholders 1.3c a share in cash for their holding in the ASX-listed company, valuing the company at about A$38.15-million.

However, in a letter to shareholders on Friday, the Flinders directors said the offer was significantly below the low estimated fair market value of Flinders, according to a 2015 option and sales agreement over Flinders’ Pilbara assets, signed between the two companies.

The option and sales agreement, worth A$65-million, would have seen Flinders receive an initial A$10-million up-front payment in consideration for the transaction, and a further A$55-million if Todd exercised its option over the Pilbara iron-ore asset.

Flinders shareholders in September 2015 rejected the acquisition offer.

The directors also stated that the current offer price of 1.3c a share represented less than 1% of the estimated initial capital expenditure of between A$3.5-billion and A$3.6-billion required to construct a 25-million-tonne-a-year standalone mine, rail and port project, and was below the volume weighted average price for Flinders shares in the 12 months prior to the bid being lodged.

While making no formal recommendation on the newly launched offer, Flinders directors have urged shareholders not to take any action.

“Your company continues to prioritise the development of the Pilbara iron-ore project by having ongoing discussions with third-party infrastructure owners in the Pilbara that are located within a reasonable distance of the project,” they stated.