Impact: Mildly Negative for Anaconda
Maritime Resources has received 52% shareholder consent to approve the company’s C$1.5M proposed private placement.
We view this as mildly negative for Anaconda’s bid to acquire Maritime, as the management received shareholder support, and the offering increases the size of the company, implying a higher price for Anaconda shareholders – the result is that Anaconda has stated it may withdraw or revise its bid
This is also negative for Maritime shareholders, as there is a reduced likelihood that the Anaconda completes the transaction (as stated or at all), suggesting further downside may exist in Maritime’s share price as we believe the company is unlikely to be able build Hammerdown on its own
The planned financing represents 23% dilution (including warrants), for existing Maritime shareholders, significantly increasing the price for Anaconda, if the deal were completed at the previously announced exchange ratio, our NAVPS estimate for Anaconda would decrease to C$1.06 (currently C$1.11) – we have not altered our estimates at this time
Anaconda’s management has responded and indicated that it may withdraw or revise its bid, reducing the probability of the transaction being completed. Consequently, we now believe which we now estimate the probability of the deal being completed to be 40-50% (was 60-70%). Regardless of the completion of the takeover, the company remains attractively valued. Assuming the transaction is completed, Anaconda is trading at 0.32x NAV or if it is not completed Anaconda is trading at 0.36x NAV (peers 0.64x). We believe that a resolution of the hostile bid (either positively or negatively) is likely to lift current overhang on the share price.