MENU

Gina Rinehart lobs $390 million takeover bid for Atlas Iron Limited (ASX:AGO)

Small-cap miner Atlas Iron Limited (ASX: AGO) was up 22% to 4.4 cents a share on Monday after receiving a new, and perhaps final, takeover bid.

Redstone Corporation, a wholly-owned subsidiary of Gina Rinehart’s Hancock Prospecting, offered to acquire the entirety of Atlas issued capital for a cash consideration of 4.2 cents per share. Hancock had recently acquired a 20% interest in the company for the same price.

The offer entails a 17% premium on Atlas’ last closing price, and a whopping 121% premium on the price of the stock at April 4, the last day of trade before the announcement of a first takeover proposal from Mineral Resources Limited (ASX: MIN).

Mineral Resources offered 1 of its shares for every 571 Atlas shares, with an implied offer price of just 3 cents a share. Hancock’s offer is not only 40% higher, but also safer: it’s in cash and has no minimum acceptance condition. Hancock doesn’t need external finance to fund the transaction – which prices Atlas at $390 million – as it can rely on cash reserves of over $3 billion.

The Atlas board will evaluate Hancock’s bid and provide shareholders with a recommendation. The company will also consider the right of Mineral Resources to match the new offer.

The Mineral Resources share price fell 0.7% to $16.88 on Monday, while Fortescue Metals Group Limited (ASX: FMG), a potential third contender that had also recently acquired a 20% interest in the company, fell 1.6% to $4.64. Neither of the two companies has yet updated the market with their response to Hancock’s move.

Foolish takeway

The fact that Atlas is now trading above the price offered by Hancock may indicate that investors expect a counterproposal from either Mineral Resources or Fortescue.

Although Atlas has attracted much attention of late, probably more for its infrastructure assets than for its iron ore business, I’m not sure these companies will take a chance to challenge Rinehart’s deep pockets, and even if they did, Atlas shareholders may still prefer Hancock’s all-cash low-conditionality offer.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.