TerraCom has made a takeover offer for Universal Coal that values the target at $294 million, which has met the “overwhelming support” of the target’s investors.
TerraCom acquired around 19.9 per cent of Universal in October last year and the latest offer is set to formally open this month until mid-March.
According to TerraCom, the new offer will allow both companies to continue to run successful coal operations with the improved benefit of geographic diversity and an expanded production footprint.
It is also expected to provide a substantial platform for future growth and development of the wider business.
Universal boasts coking and thermal coal assets across South Africa’s major coalfields, including Kangala, New Clydesdale, North Block Complex, Ubunto, the Eloff project, Arnot South and Berenice/Cygnus.
“TerraCom understands that the Universal Coal board may not have had sufficient time to support the offer, however TerraCom has received overwhelming support from a number of highly credentialed institutional investors,” the company stated.
“Universal Coal has been subject to a number of failed takeover attempts throughout the last number of years that are likely to have frustrated Universal shareholders.
“Consequently, TerraCom is making this announcement, with overwhelming support from Universal institutional investors, in order to give Universal shareholders the surety that TerraCom is committed to completing the transaction.”
TerraCom is extending an offer price of 33.5 cents per Universal security consisting of 10 cents cash and around 0.6 new TerraCom shares.
This is a 42.6 per cent premium to the Universal last closing price on January 31