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- Genesis Minerals (ASX:GMD) is seeking to takeover Dacian Gold (ASX:DCN)
- Genesis has today issued a report to its shareholders
- The company is recommending that its shareholders approve
- Genesis outsizes Dacian with its billion-dollar market cap
- GMD shares last traded at $1.40, while DCN shares last traded at 22.5 cents
Genesis Minerals (ASX:GMD) shares were up almost five per cent in the first hour of trade today as the company seeks to buy the remaining 20 per cent of Dacian Gold (ASX:DCN).
Dacian shares, meanwhile, soared 80 per cent to 24 cents.
Genesis has been slowly accumulating a total interest in Dacian in recent history, currently its largest shareholder. It acquired control back in September last year.
In March this year, Genesis triggered a board reshuffle at Dacian tied to an off-market offer.
Brokers favour Genesis
The response from Dacian shareholders probably isn’t surprising given that four different brokers rate the stock a “sell” while three more neutral analysts vote “hold.”
Worth considering is that a “hold” rating from investment bank analysts is often treated the same as a sell rating, just, the company in question could be a client of the broker.
Dacian’s $292 million market cap stands in contrast to Genesis Minerals’ $1.46 billion.
Year-long performance sound
Meanwhile, Genesis shareholders have netted 32 per cent returns over the last year. This is despite brokers’ apathy on the stock.
But Dacian shareholders aren’t woeful either – off a lower base, they’ve enjoyed returns of 92 per cent.
The sharp upward spike in morning trade on Monday suggests shareholders are, at the very least, still interested in the Genesis offer. At least, those who haven’t described Genesis Minerals’ initial offer as undesirable.
Independent directors push for acceptance
Genesis has today issued a bidder’s statement to the market headed by corporate lawyers Gilbert & Tobin.
Dacian’s eligible shareholders are set to receive 0.1685 GMD shares for every share held.
The offer consideration represents a premium of 88 per cent to the last closing price and a 98 per cent premium to the 20-day value-weighted average price of 11.9 cents per share.
Genesis to sweeten deal if terms met
“Base Offer Consideration will be increased to 0.1935 new Genesis shares for every one Dacian share held if Genesis acquires a relevant interest in not less than 95.1 per cent … during or at the end of the offer period,” Genesis wrote on Monday.
Ultimately, Genesis has valued Dacian shares at 27 cents each.
“The Independent Dacian Directors unanimously recommend that Dacian shareholders ACCEPT the offer,” Genesis Minerals’ bidder’s statement read today.
“The acquisition of the remaining ~20 per cent of Dacian is a logical step to simplify the ownership of an enviable position in the Leonora District – 15Moz of combined resources, 3.9Moz of combined reserves and 4.3Mtpa of combined milling capacity,” Genesis chief Raleigh Finlayson said.
GMD shares last traded at $1.40, while DCN shares last traded at 22.5 cents
