Northern Energy rises after takeover offer

Finance

Publishing Date: 08 Oct 2010 12:21pm GMT
Author: Mining Journal

Shares of Australian coal explorer Northern Energy Corp (NEC) surged almost 40% on Oct 8 following an A$193 million (US$187.6 million) all-cash takeover bid from New Hope Corp.

Northern reached A$1.55/sh on the ASX by market close, already higher than New Hope’s A$1.50/share offer. The Queensland-based Northern went into a trading halt yesterday after stating it had received a “non-binding indicative approach”.

Upon making its offer, New Hope said it represented a 55.6% premium to Northern’s closing price of A$0.95 on September 29, the day prior to the formal approach being made by the company.

Robert Milner, New Hope chairman, said: “We believe this to be a very attractive offer for NEC shareholders as it is at a substantial premium to NEC’s recent trading history. Our offer also provides certainty of value in what has been a volatile period for NEC shareholders.

“Northern Energy is a coal exploration company and requires significant amounts of additional capital to develop its project pipeline. New Hope has a strong balance sheet and the capacity to develop NEC’s projects from existing cash reserves.

“New Hope’s offer allows NEC shareholders the opportunity to exit at a highly attractive price without the need to contribute further cash to NEC.”