Baru Resources and Argosy Minerals to merge, sign of the times
A sign of the times will see Baru Resources (ASX:BAC) make an agreed off market takeover offer for Argosy Minerals (ASX:AGY) that will merge cash and a graphite project.
Argosy
shareholders will receive one new Baru share for every one Argosy share held.
Baru currently has on issue 49,796,009 shares and Argosy has on issue
126,029,105 shares. Baru will therefore issue 126,029,105 shares as
consideration for the acquisition.
The Offer values Argosy at $0.038 per
share based on Baru’s closing share price on the ASX on 1 July 2013 of $0.038.
Baru has cash reserves and other receivables on hand at current date of
$3 million, representing a net asset backing of approximately $0.06 per
share.
The Argosy Board unanimously recommends that Argosy shareholders
accept the Offer in the absence of a superior proposal. The takeover is
supported by a majority of the Baru board.
The transaction would create
an entity with net cash and semi-liquid reserves of $3 million held by Baru,
combined with the potential of the Argosy graphite project in Namibia.
In addition, there should be a stronger allocation of resources with one
combined entity with one less set of listing fees and less administrative
fees.
Argosy shareholders will hold 72% of the combined group thereby
enabling shareholders to retain material exposure to future upside of the
Graphite Projects in Namibia.
The deal is subject to major conditions
including a 90% minimum acceptance condition and all necessary regulatory
approvals being obtained.
This merge appears on paper to be a good deal
for both companies, it is not likely to be the last.
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