Shares of Atlas Iron Ltd [ASX:AGO] increased in value another 22.22% yesterday, following news of a takeover bid by Redstone Corporation Pty Ltd.
Atlas went into a trading halt yesterday morning, pending the announcement.
The company’s shares are currently trading at 4.4 cents, up from their close price prior to the trading halt of 3.6 cents.
Why has Atlas Iron’s share price increased?
Atlas received a takeover offer yesterday morning from Redstone, a wholly‐owned subsidiary of Rinehart’s Hancock Prospecting.
Hancock is a privately owned Australian company that is focused on the Pilbara region of Western Australia, particularly with the iron ore sector.
The all-cash offer is for 100% of Atlas’ shares for 4.2 cents, which is a premium of 16.67% to its price of 3.6 cents, prior to the trading halt yesterday morning.
Tad Watroba, Executive Director of Hancock, stated that Atlas’ assets compliment Hancock’s portfolio.
‘We see long term synergies between the Atlas assets and the other iron ore interests within the Hancock Group. There is potential to unlock value through the future development of Atlas resources as part of our wider system of operations. If we obtain control of Atlas, we intend to conduct a strategic review to better understand the most appropriate time and means to develop and integrate Atlas into the existing operations of the Hancock Group.’
This morning Atlas announced that they have issued a notice to Mineral Resources Ltd [ASX:MIN], who made a takeover offer on 9 April. This was under the matching rights regime which allots them three days to make a counter proposal to the Hancock offer.
What’s next for Atlas Iron?
The offer from Redstone represents a 41% premium to the previous offer from Mineral Resources in April. However, Atlas are expecting the matching right process to lead to a superior offer from Mineral Resources.
As for what Mineral Resources will come back with, it is unknown at this point in time. The company have stated that they are ‘considering its options and will advise its intentions in due course’, as reported by The Sydney Morning Herald.
The Atlas board have advised shareholders to take no action in relation to the Hancock offer, until further advice has been provided by the board.
For Money Morning
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