On Friday, directors of Herald Resources advised shareholders to tender their shares to IndonesiaÆs Bumi Resources or Tango Mining, the acquisition vehicle created by IndonesiaÆs Antam and ChinaÆs Zhongjin Lingnan. The directors of Herald are in essence telling shareholders that they cannot guide them on which bid is superior and shareholders will ultimately prevail in deciding who will buy the company.
Antam is a metals mining company 65% owned by the government of Indonesia. Zhongjin is a Chinese state-owned enterprise, also engaged in mining.
Both bidders are offering A$2.80 ($2.69) per share, for a total equity value of A$552 million, and both bids have turned unconditional. Bumi is bidding through Calipso Investments, in an offer which closes on Thursday, July 3, while the Tango offer closes two days earlier on July 1. Both bidders have cornered a similar number of shares in Herald. TangoÆs shareholding stands at 19.29% including shares tendered by Herald directors after they recommended an improved offer from Tango a few days ago. CalipsoÆs shareholding stands at 19.86%.
Calipso is being advised by Credit Suisse who is also providing the finance for the bid. Tango is being advised by Macquarie Capital Advisers. Herald is being advised by Euroz Securities.
HeraldÆs main asset is a lead/zinc project in Dairi on the island of Sumatra in Indonesia. The Dairi project has been held up because neither Herald nor Antam, which owns a 20% stake in the project, have been able to secure the requisite approvals to progress the development.
Herald has been in play since December 2007 when Bumi tabled an unsolicited offer for the Australian company, valuing the target at A$455 million. HeraldÆs board reluctantly endorsed the bid one month later while continuing to seek an alternative and was rewarded when the Antam-Zhongjin consortium entered the fray in January with an offer higher than Bumi's original offer. Since then, the bidders have been engaged in a bidding war with each matching the other's bid for the last six months.
Shareholders of Herald have benefited from the situation as the current bid is up 21% from the original offer and this has had a positive impact on Herald's traded share price on the Australian Securities Exchange. Herald closed at A$2.91 on the ASX on Friday, in a market which traded down 1.3% led by a drop in banking stocks. Despite the share trading higher than the offer price, Herald chairman Terence Allen advised shareholders that it would be in the interest of the company and its shareholders if the uncertainty ended and one of the two bids succeeded thus suggested shareholders choose to tender to one of the two.