The Cardinal Resources Ltd (ASX: CDV) share price has risen by nearly 1% after the mining company announced one of the suitors in the three-way battle to take it over has upped the stakes.
Cardinal announced that Russia’s Nord Gold has now increased its offer to $1.05 per share, up from 90 cents previously. In early morning trading, the Cardinal share price has increased to $1.08 after closing yesterday’s session at $1.07.
Three-way deadlock
Cardinal has been pursued as a takeover target by three different companies, all with the same offer price of $1.05.
In June, Cardinal received a takeover bid from Hong Kong-based Shandong Gold at an offer price of 60 cents per share, valuing the company at around $300 million. The Chinese company, which is the second-largest gold producer in China, then increased its offer price for Cardinal to $1.00 per share in September, later increasing it again to $1.05 in November.
That higher offer was meant to outbid another interested party, Nord Gold, a Russian gold miner which had previously increased its own offer from 60 cents to 90 cents a share. Nord Gold has now also increased that offer price to $1.05 today.
Cardinal was also approached by another suitor in November, in the form of a Ghana-based company, Engineers & Planners Company Limited. That offer also stood at $1.05 per share.
Takeovers Panel
The deadlock seems to have complicated things a little.
Cardinal had earlier taken the issue to the federal government’s Takeover Panels to ask for a truce when Shandong and Nord Gold were at a stalemate price of $1.00 per share.
The issue was around a clause in the offer that stated “best and final offer in the absence of a higher competing offer”.
Cardinal argued that this clause is used to kill off rival bidders who matched the previous offer.
The Panel ruled that the last and final statement was not a misuse of the truth in the takeovers policy. It further advised that companies are allowed to subsequently increase their bids in a deadlock situation.
About the Cardinal Resources share price
Cardinal is a West African gold‐focused exploration and mining company that holds interests in tenements within Ghana, West Africa. The company is focused on the development of the Namdini Gold Project, and released its feasibility study on 28 October 2019. The study concluded the project had an ore reserve of approximately 5.1 million ounces.
The Cardinal share price has risen by 225% this year. It began the year at 32 cents before rising to today’s level. The company currently commands a market capitalisation of $575 million.
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More reading
- Cardinal Resources (ASX:CDV) share price lifts after third takeover bid
Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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