Australia's Genesis lobs $3.9bn bid for Vault as M&A frenzy builds
Genesis Minerals has lobbed a bid worth about A$5.6-billion ($3.9-billion) for Vault Minerals, topping an existing offer from Regis Resources, as surging gold prices fuel a consolidation wave in Australia's mining sector.
The combination would create one of the country's largest gold producers with a market value of A$12.6-billion and an annual production capacity of up to 700 000 oz.
Genesis said on Monday it estimates it will bring in some A$2-billion in synergies as its Leonora operations are just 25 km (15.53 miles) from Vault's.
This means its higher-grade ore could be milled through Vault's processing plant rather than having to expand its own.
Shares of Vault rose as much as 12.3% to A$5.12, their highest since mid-March. Genesis shares fell 8.4% to A$5.76, while the broader benchmark was largely unchanged.
Under the proposal, Genesis offered 0.7629 new shares plus A$0.475 in cash for each Vault share, valuing Vault at A$5.274 a share, a 15.7% premium to the stock's last close and nearly 6% above Regis' all-stock bid in May.
Vault said it had told Regis of the proposal and given it until Friday to match or improve its offer.
Genesis shareholders will own around 59.8% of the combined entity and Vault shareholders the remaining 40.2%. It has also proposed that its expanded board be reconstituted to include three nominees of Vault.
Regis said it was considering its position and rights under the scheme. Its shares were last up 5.6%.
Last year, Ramelius Resources took over smaller peer Spartan Resources in an A$2.4-billion deal amid a wave of consolidation in the sector driven by rallying gold prices.
Activist investor Elliott has also pushed Australia's largest gold producer Northern Star to put itself up for sale, after a prolonged period of underperformance.
