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Forrestania Resources (ASX:FRS) has today approached Kula Gold (ASX:KGD) with an offer to acquire the remaining scrip it doesn’t own in the Australian gold explorer at a rate of one FRS equity for every 5.6 KGD shares.
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The company’s scrip-only offer has no cash component and represents a 41% premium on Kula’s ten-day volume-weighted average price: 3.55cps. (KGD shares last sold at 4.4cps heading into Monday’s close.)
Should the $58.89 million deal go through, Forrestania would then own Kula Gold in its entirety; a takeover very in line with the Western Australian miner’s long-term ambitions to consolidate gold assets in the western state.
Kula’s board of directors has already recommended that shareholders accept the offer. Each director has already said they intend to accept for their own holdings.
From Forrestania’s side, the selling point is simple, with company chairman David Geraghty explaining as much in the bid implementation deed: “This expands Forrestania’s regional presence and strengthens our position as a focused gold growth company with genuine scale and clear pathway to growth.”
Mark Stowell, Kula Gold’s reigning chairman, agreed and suggested the deal is “highly value-accretive” for shareholders. He believes the proposed union would enhance scale and help streamline operations.
The next date to watch now is Oct. 27, which is when Forrestania will lodge its bidder’s statement with ASIC. Kula shareholders will get it two days later.
HotCopper understands the offer period will close on Monday, December 1.
FRS shares are at 24.5c each this morning.
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