Fortescue (ASX:FMG) subsidiary FMG Pilbara has proposed to acquire all of Red Hawk Mining’s (ASX:RHK) shares via an off-market takeover offer.
Under the offer, FMG, which has a market capitalisation of $57.91 billion, will acquire the company for $1.05 per Red Hawk share, which represents a 28% increase to the last closing price of $0.82 per share.
The consideration per share will be increased to $1.20 per Red Hawk share if FMG obtains a 75% interest within seven days of the offer being open for acceptance. The increased offer price represents a 46% premium to the last closing price.
Red Hawk, which has a market capitalisation of $163.84 million, notes that the offer implies the company has a fully diluted equity value of $254 million.
BDO Corporate Finance Australia was engaged to prepare an independent expert’s report, which concluded that the offer is fair and reasonable.
Chairman Cheryl Edwardes says the Red Hawk board unanimously concluded that the base offer price and the increased offer price are at an attractive level.
“Whilst we firmly believe that the Blacksmith Project has the potential to be a major iron ore project, there is significant cost, time, and risk associated with developing a project of this scale, particularly in the context of an uncertain broader global economic outlook,” Edwardes says.
“As such, the board believes that the offer provides shareholders with a compelling opportunity to de-risk their investment and realise a certain value at an attractive premium to historical trading levels leading into the announcement of the offer.”
Since May 2024, Red Hawk has been pursuing alternative funding options for the Blacksmith Project beyond traditional financiers. These options included the possibility of pursuing a corporate transaction, seeking a joint venture partner, or conducting a full or partial asset sale.
After completing the Prefeasibility Study, the company conducted a comprehensive strategic process to explore options for progressing the project.
Red Hawk engaged with 17 parties and found the offer from FMG the most compelling.
The offer is not subject to any financing or due diligence conditions and does not have a minimum acceptance condition. The offer remains open until 3 March 2025 7pm AEDT, unless extended or withdrawn.
As of 11.30am AEDT today, Red Hawk Mining’s share price has spiked 46.34% to $1.20.
Red Hawk Mining is an iron ore-focused mining company that operates in Western Australia.
Fortescue is a global technology, energy, and metals mining company focused on iron ore mining.
Write to Aaliyah Rogan at Mining.com.au
Images: Red Hawk Mining
