PanAust shares jump, remain below takeover offer

Guangdong Rising has offered $2.30 cash per share for mining exploration company PanAust.

Just 11 months ago PanAust shares were trading above today’s $2.30 per share cash takeover offer by Chinese investment company Guangdong Rising Assets Management.

But between June 14 and yesterday, PanAust shares had dropped 30%. Guangdong Rising, which has a 23% stake in the mining exploration company that concentrates on Laos, pounced.

PanAust’s shares today surged as much as 35% to $2.14. At 1.06 pm (AEST) the stock was up 51 cents, or 32%, to $2.09, still 21 cents below Guangdong Rising’s $2.30 a share offer.

“On behalf of the PanAust board, the chairman has written to Gaungdong Rising that this price remains materially below the level at which the board would be prepared to recommend a takeover offer to its shareholders,” PanAust said in an ASX statement.

Still, PanAust’s board has permitted Guangdong Rising to conduct due diligence “to assist it to materially improve its indicative offer price.”

Rothschild and Herbert Smith Freehills have been hired by PanAust to advise the company on Guangdong Rising’s takeover offer and its future strategy. Both advisers declined to comment.

Guangdong Rising’s $1.46 billion takeover offer is the latest multi-billion dollar takeover offer by a non-Australian company. Li Ka-shing’s Cheung Kong is trying to acquire gas distributor Envestra for $4.04bn and South Africa’s Woolworths has sought to buy retailer David Jones for $2.14bn, according to Bloomberg data.

Pending or completed mergers and acquisitions in Australia this year now total more than $50 billion, more than twice the level they were for the same period last year.

Guangdong Rising began buying PanAust shares as early as September 2009, according to Bloomberg data. By February 14 Guangdong Rising had increased its stake to 145.1 million shares through the purchase of 5 million shares, bringing its PanAust shareholding to 23%.

Rothschild and Freehills may eventually be forced to oversee a deal rather than a takeover defence.