Silver Lake forced to lift EganStreet bid
8th November 2019
Resources Rising Stars
Silver Lake Resources has been forced to lift its stalled takeover offer for developer EganStreet Resources after EganStreet received a higher offer (reports MiningNews).
EganStreet confirmed late Friday it had received an indicative, non-binding A40c per share cash takeover proposal from unlisted Adaman Resources.
Adaman, which owns the Kirkalocka gold mine near EganStreet's Rothsay project, needed to secure a $60 million funding facility from Remagen Capital Management to fund the buy.
However, EganStreet will cease discussions with Adaman after Silver Lake increased its offer.
Silver Lake was initially offering 0.27 of a Silver Lake share for every share EganStreet share held.
Silver Lake first made the bid in late July when its shares traded as high as $1.50, a six-year high.
A fall in its shares to as low as 90c in mid-October stalled any acceptances from EganStreet shareholders, and as of October 28, it had only managed to secure acceptances of 31.5%.
Silver Lake will now offer 0.4 of a share for each EganStreet share held, valuing EganStreet at 46c per share.
The ratio implies a total transaction enterprise value of $63 million, relative to the original transaction EV of $52 million when it was first announced.
Silver Lake says it will increase the consideration to 0.431 share for every one EganStreet share if it reaches 38% of EganStreet by November 8.
That would lift the value at current share prices to 50c per share, implying a $68 million EV.
Once Silver Lake reaches 38% of EganStreet, it plans to declare the offer unconditional.
The offer is unanimously backed by the EganStreet board.
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