The development effectively challenges two Dnipropetrovsk-based billionaires to increase an earlier offer for a major Australian manganese miner
A bidding war over control of a major Australian manganese miner shifted into higher gear, with a Western equity
fund upping the ante for the Australian company, equaling an earlier bid made by one of Ukraine’s largest business groups. The development effectively challenges two Dnipropetrovsk-based billionaires to increase an earlier offer or fold their cards.
Pallinghurst Resources, a London-based private equity fund, on Oct. 12 locked horns with Palmary Enterprises, an offshore vehicle backed by Ukrainian tycoons Igor Kolomoisky and Gennady Bogolyubov as part of their Privat Group, in a pitched bidding war for ownership of Consolidated Minerals (ConsMin), an Australian manganese miner.
If Privat gains control of ConsMin, it will double its control over the worldwide ferroalloy market to 20 percent. The Privat group currently controls much of Ukraine’s ore and ferroalloy business and holds interests in factories in Russia, Poland, Romania and the US.
The Australian newspaper The Age reported Oct. 16 that Pallinghurst upped its ante in the bidding war for ConsMin with an offer of $860 million for the company, equaling an earlier offer made by Palmary. Pallinghurst declared its offer final in the absence of a higher cash offer.
The report said the equity fund structured its offer as an “auction accelerator” to provoke Palmary into making an even higher bid for ConsMin.
Pallinghurst also extended the deadline for its payment, which promised to match any subsequent higher offer from Palmary.
Privat’s Palmary ignored its rival’s Oct. 12 move and urged Pallinghurst to cancel its offer if it wanted to take part in a “genuine auction process.”
Palmary described the structure of Pallinghurst’s bid as uncompetitive, unfair and uncertain.
On Oct. 15, Palmary applied to Australia’s Takeovers Panel for a declaration of unacceptable circumstances in relation to Pallinghurst’s bid, Australian news sources reported. If Palmary’s application is successful, Pallinghurst will have to cancel certain terms of its bid statement. Palmary also announced that it waived the remaining conditions on its all-cash offer, which included the sale or acquisition by ConsMin of businesses valued at more than $20 million and any material change for the worse in ConsMin’s business. Palmary has already received the necessary approvals for its proposed takeover of ConsMin from Australia’s regulatory body.
Meanwhile, ConsMin has advised its shareholders that it is reviewing Pallinghurst’s bid.
In response to Palmary’s initial statements accusing Pallinghurst’s bid of being uncompetitive, Pallinghurst director Arne Frandsen said that Palmary’s reaction demonstrated its intention to derail Pallinghurst’s offer.
She said that “Palmary is clearly aware that when ConsMin shareholders begin accepting the Pallinghurst offer, Palmary will be under maximum pressure to bid its highest price for ConsMin,” adding that Palmary was hoping that ConsMin’s current shareholders would not accept Pallinghurst’s bid so that Palmary could win the company at its current bid offer.
Following these statements, Palmary declared that its last offer for ConsMin was unconditional and Gennady Bogolyubov urged ConsMin shareholders not to accept Pallinghurst’s offer.
“If you accept Pallinghurst’s offer, you will lose control of your ConsMin shares and you will not be able to accept any higher offer that may emerge,” he said.
ConsMin produced some 888,000 tons of manganese last year, equivalent to 10 percent of high-grade world production. Skyrocketing demand for this mineral has caused prices to surge on world markets this year. Market analysts said that Privat’s interest in ConsMin lies in its ability to supply manganese to Highlanders Alloy, an American ferroalloy plant controlled by the Ukrainian business group. Manganese ore is used in steelmaking to improve its durability.
Through its Palmary Enterprises, Privat Group currently controls a 14 percent stake in ConsMin, which makes it the company’s largest shareholder. Pallinghurst Resources owns about a 7 percent share in the manganese miner.
The bidding for ConsMin started in February of this year, but Privat only entered the game in late August.
