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BRISBANE gold miner Lihir Gold Ltd (LGL) today rejected a takeover offer from Newcrest Mining, the same day it appointed former BHP executive Graeme Hunt (pictured) as managing director and CEO.
The offer was based on one Newcrest share for every nine LGL shares plus $0.225 cash per LGL share, less any interim dividend declared for the half year ended June 2010. Based on Newcrest’s closing share price as at 31 March 2010, the offer was equivalent to $3.87 per share and valued the company at around $9.2 billion.
The LGL board unanimously agreed that the offer did not represent good value for shareholders.
LGL Chairman Ross Garnaut, says the offer undervalued LGL, both in terms of its existing business, and in terms of the potential value the company expected to deliver to shareholders in the future.
“It also did not include a sufficient premium for control,” he says.
“Directors and management made certain that Newcrest was given the opportunity to make an offer that would deliver full value for our shareholders, but the Board’s assessment was that the offer ultimately received was inadequate. We felt we had an obligation to shareholders to reject the offer.”
Garnaut says LGL remains undervalued in the marketplace.
“We have recently made management changes and taken other steps that will assist us in the process of rebuilding market confidence and correcting that valuation shortfall,” he says.
“In that context, it was clear to the Board that the Newcrest offer failed to provide full value for the underlying assets with an appropriate takeover premium.
“The world class, long life nature of LGL’s pure gold assets would add a great deal to the value of Newcrest, as it would to some other companies, and the offer price did not provide an appropriate sharing of the potential benefits of the proposed combination.”
The appointment of Hunt to the top role follows the resignation of Arthur Hood in January.
A metallurgist by training, the 53-year-old spent 34 years with BHP Billiton. He left BHP in March last year as president of the iron ore division.
Hunt will relocate to Brisbane from Melbourne and will take up his position immediately.
“LGL has great assets in three countries, a talented management team in place, and significant untapped potential,” says Hunt.
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