Genesis Minerals has lodged a binding $5.6 billion offer for Vault Minerals, gatecrashing Vault's agreed all-scrip merger with Regis Resources and starting a five-day clock for Regis to match or walk.
The cash-and-scrip proposal, lobbed before Monday's open, is 0.7629 new Genesis shares plus 47.5 cents cash for each Vault share, valuing Vault at $5.2741 a share: a 15.7 per cent premium to Friday's close and 14.5 per cent above the implied value of the Regis deal signed on 4 May. Genesis attached no financing or due diligence conditions, with the roughly $500 million cash component funded through secured credit facilities and a mix-and-match option for Vault holders.
Vault's board answered the same day, unanimously declaring the approach a "Vault Superior Proposal" under its scheme deed with Regis. That declaration triggers Regis's matching right, which expires at 11.59pm Perth time on Friday. Regis said it is reviewing the competing proposal and its rights under the deed.
The market picked a side quickly. Vault shares jumped 11.6 per cent to $5.09, the day's best performer on the ASX 200, while Genesis fell more than 4 per cent and Regis edged higher. Vault had already gained about 82 per cent over the past year, against roughly 3 per cent for the index.
A combined Genesis-Vault would be a roughly $12.6 billion producer of 600,000 to 700,000 ounces a year across five Western Australian mines, consolidating the Leonora-Laverton district Genesis has been assembling deal by deal after its $250 million purchase of Focus Minerals' Laverton assets and $639 million acquisition of Magnetic Resources inside the past year. On Genesis's numbers, the combined group would hold 33.6 million ounces of resources, 9.4 million ounces of reserves and about $611 million in net cash after completion. Genesis puts the cost savings at about $2 billion post-tax over ten years and says three-quarters of that is unique to a Genesis-Vault pairing. Those are the bidder's numbers, not audited ones.
“What we think has been a dance three or four years in the making," MA Financial Group's managing director of equities Paul Hissey said. "Industrial logic and clear operating synergies appear to have won the day.”
Behind the bid is the gold price. With gold trading above US$4,000 an ounce after a rally that has run all year, Western Australian producers are cashed up and consolidation has followed; the Regis-Vault tie-up Genesis is now trying to break was itself pitched in May as a merger of equals, with no cash component at all.
Regis has until Friday night, Perth time, to decide whether to lift its offer, add cash, or let Vault go. Whichever way it lands, Vault shareholders now have two bidders where a month ago they had one.
