The Independence Group NL (ASX: IGO) share price is trading higher on Friday.
This follows an update on its takeover approach for Western Australia-based nickel miner Panoramic Resources Ltd (ASX: PAN).
At the time of writing the Independence share price is up 2% to $6.10. Whereas the Panoramic Resources share price has responded even more positively and is up 6% to 39 cents.
What did Independence announce?
At the start of the month Independence offered to acquire all Panoramic shares it does not already own in an all-scrip deal. It tabled an offer of 1 Independence share for every 13 Panoramic shares held.
At the time this offer implied an offer price of 47.6 cents per share which was a premium of 42% to Panoramic's last close price. It valued its equity at $312 million.
This offer didn't go down well with the Panoramic board or its major shareholder, Zeta Resources. The board advised shareholders to take no action and Zeta explained that it "does not intend to accept Independence Group's current offer."
But things appear to have progressed on Friday. This morning Independence announced that it has entered into a confidentiality deed with Panoramic to conduct due diligence. This due diligence is expected to commence immediately and run until at least early-December.
Equity raising.
There is still a spanner in the works, though. Independence notes that Panoramic is assessing options to raise additional capital following operational issues.
Independence has stressed that any capital raising would represent a breach of its offer conditions. As a result, it reserves the right to terminate the offer should an equity raising be announced.
Given that an equity raising would likely be quite dilutive to shareholders, I suspect many would be far keener for a deal to be made with Independence. But only time will tell which direction Panoramic takes in the coming weeks.
