The long running takeover battle may be drawing to an end. I am not talking about telco iiNet Limited (ASX: IIN), but copper producer PanAust Limited (ASX: PNA).
Similar to the latest development for iiNet, with suitor TPG Telecom Ltd (ASX: TPM) coughing up more for iiNet, PanAust is also likely to get Guangdong Rising Assets Management (GRAM) to sweeten its takeover offer of $1.71 a share.
I suspect GRAM has been forced back to the negotiation table because of a poor take-up of its unconditional and direct offer to shareholders.
The $1.71 offer is GRAM's second pitch for PanAust following its $2.30 indicative and non-binding offer a year ago.
But the crash in the copper price saw the deal unravel.
The copper price could again be steering the hand of GRAM, which is PanAust's largest shareholder and owns nearly a quarter of the miner.
The red metal may be 0.1% weaker today but it has enjoyed its longest rally in nearly a decade since it slumped to a low in January this year.
The bounce in copper and a supportive medium-term outlook for the metal have sparked a re-rating in copper mining stocks. Well, except PanAust as GRAM's large stack and low offer price have put a cap on any rebound.
The chart above says it all and drives home the point that GRAM will need to lift its offer if it is going to see the light of day.
However, the deal is unlikely to be anywhere close to the original $2.30. GRAM knows that, unlike iiNet, PanAust is not going to be saved by a White Knight (a second competing bidder).
The independent report commissioned by PanAust puts the stock valuation between $1.84 and $2.04 a share. Any improved offer from GRAM is likely to be within that range.
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