Published On: Thu, Aug 9th, 2018

Nevsun rejects Lundin takeover as it seeks alternative buyer

Nevsun Resources Ltd. is recommending shareholders reject a takeover attempt by Lundin Mining Corp., opting instead to look for other buyers.

“To ensure we have left no stone unturned, the board has commenced a strategic review process to consider all alternatives available to Nevsun to maximize value – above and beyond the proposals already generated by Nevsun’s recent strategic investment process – including a potential acquisition of Nevsun as a whole,” Dave Smith, who heads a special committee of independent directors, said in a statement.

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Last month, Toronto-based Lundin formally launched a hostile takeover bid, arguing deep pockets will be required to develop its Timok copper-and-gold project in Serbia and its Bisha mine in Eritrea. Lundin has been trying to acquire the company since October.

In addition to undervaluing the portfolio, Lundin’s latest bid is lower than previous transactions it proposed, Nevsun said. It’s also lower “than other alternatives which are expected to emerge,” the company said.

Nevsun has been looking at financing alternatives for development of Timok since March 2017, and has received four proposals from major and midtier mining and smelting companies to buy as much as a 19.9 per cent equity interest in Nevsun, as well as various proposals to partner on Timok’s development. Three of these are at a premium to the per share price offered by Lundin, it said.

Under Lundin’s bid, Nevsun shareholders would receive C$ 4.75 in cash for each Nevsun share tended. That represents an 82 per cent premium to the closing price of C$ 2.61 on Feb. 6, the date it first proposed taking over the company. Nevsun shares closed in Toronto at C$ 4.93 on Wednesday, giving it a market value of C$ 1.49 billion.

The board urged shareholders to take no action on Lundin’s bid. They have until Nov. 9 to tender shares.

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Nevsun rejects Lundin takeover as it seeks alternative buyer