The Independence Group NL (ASX: IGO) share price is pushing higher following an announcement relating to its takeover of fellow nickel producer Panoramic Resources Ltd (ASX: PAN).
At the time of writing the Independence Group share price is up 2% to $6.36. Whereas the Panoramic Resources share price is down a sizeable 20%.
What was announced?
Independence Group has advised its shareholders that it plans to let its takeover offer lapse on the evening of January 17.
According to the release, a number of defeating conditions of the offer have been breached. This includes issues relating to its production guidance, financing agreement, and the technical expert's report.
Given the significance of these conditions to the offer, management has determined that it does not intend to waive these breaches or extend the offer period. As a result, the offer will lapse at 7pm Sydney time on January 17.
Investors that have already accepted the offer will have their acceptances cancelled and will now be free to deal with their Panoramic shares as they see fit.
Independence Group's managing director and CEO, Peter Bradford, explained: "Any M&A must deliver a return to our shareholders. At announcement, IGO's off market takeover bid for Panoramic, which was based on the public disclosure of the 2017 Savannah Project feasibility study, represented a potential "win win" for both IGO and Panoramic shareholders."
"The subsequent disclosures by Panoramic, including the operational update and need for additional funding have significantly eroded the value proposition for IGO and its shareholders. Consequently, we have decided to allow the Offer for Panoramic to lapse. This decision reflects our disciplined approach to M&A," Mr Bradford concluded.
Independence Group had offered 1 of its own shares for every 13 Panoramic shares, implying an offer price of 47.6 cents per share.
This offer looked doomed to fail from the very beginning, though. Panoramic warned that the offer was highly conditional, opportunistic, and urged shareholders to reject it. Another issue was that Panoramic's major shareholder, Zeta Resources Ltd (ASX: ZER), advised that it would not accept it.
So it's back to the drawing board for Independence Group. Not that its shareholders seem to mind, judging by its share price rise.
