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Augusta calls HudBay’s bid ‘desperate’

Keywords: Tags  HudBay Minerals, Augusta Resource, takeover bid, copper, nonferrous, Richard Warke, Gil Clausen, Steve Parsons National Bank Financial


NEW YORK — Augusta Resource Corp. has called HudBay Minerals Inc.’s offer to extend its unsolicited takeover bid for all of the company’s outstanding shares and waive the minimum tender condition a “desperate attempt to give life support to their bid.”

Vancouver, British Columbia-based Augusta said the offer has received minimal support from shareholders, with less than 0.5 percent of shares tendered, and the company’s shares have traded at a 27-percent premium since HudBay announced its takeover bid in February (amm.com, Feb. 12).

Toronto-based HudBay offered 0.315 of a HudBay common share for each Augusta common share held, valuing Augusta at an enterprise value of about Canadian $540 million ($486.1 million). The offer represented a premium of 62 percent to Augusta’s 20-day volume-weighted average price on the Toronto Stock Exchange for the period ending Feb. 7, according to HudBay.

“HudBay started this process with a lowball bid, which the market clearly has rejected. Now, when their bid is failing, HudBay drops their minimum tender condition in a desperate attempt to give life support to their bid,” Augusta executive chairman Richard Warke said in a statement March 17.

“Rather than making a proper offer that Augusta shareholders would view as fair, HudBay is opting to proceed with plan B, which is to try to secure a minority blocking position to thwart any future strategic alternatives,” Augusta chief executive officer Gil Clausen said.

Steve Parsons, an analyst at Montreal-based National Bank Financial who covers Augusta, said the offer extension is a “clear indication that the bid is below the tender offer,” adding that “Augusta on a standalone basis would be trading higher than the offer price, and as it continues to make progress on permits it will trade at a higher share price than the offer.”

Parsons said the coming weeks will be crucial for Augusta: The company is scheduled to announce first-quarter results March 26 and the U.S. Army Corps of Engineers is slated to announce its decision on whether or not to approve a Clean Water Act permit for its Rosemont copper deposit near Tucson, Ariz.

Separately, HudBay said it had acquired 4.9 percent of the outstanding shares of Vancouver-based Panoro Minerals Ltd., which is developing copper projects in Peru. The deal gives HudBay 11.2 percent of Panoro’s outstanding shares.


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