The board of Tyler Resources (TYS-V, TYRRF-O) has rejected a takeover bid from Mercator Minerals (ML-T, MLKKF-O) that values the company at $139 million.
On Oct. 19 Mercator offered 0.113 of a share for each Tyler share, conditional on getting two-thirds of Tyler’s shares tendered to the bid. It mailed its formal bid documents on Nov. 12, and the bid will be open until Dec. 17.
Tyler’s independent directors delivered a recommendation to the whole board that the proposal be rejected, arguing that the bid undervalues Tyler, whose principal asset is the Bahuerachi polymetallic porphyry deposit in southwestern Chihuahua state, Mexico. A preliminary economic assessment on Bahuerachi put the project’s net present value at US$216 million, using a discount rate of 8% and a taxation rate of 28%.
Tyler’s board also revealed the terms of an earlier offer from Mercator of $1.25 per share, about 20% higher than the implied value of the current bid. Mercator poposed that on Oct. 5 and Tyler allowed that bid to expire five days later.
Mercator said the advantages of its bid were in offering development of Bahuerachi out of cash flow from Mercator’s Mineral Park mine, currently under development in northwestern Arizona, so that Tyler’s equity would not be diluted in raising money to develop Bahuerachi. Mercator’s bid is at a 46% premium over Tyler’s closing price on Oct. 18, immediately before the bid.
Tyler shares closed unchanged at $1.13 on Nov. 12, while Mercator shares were down 50 at $9.18.
Be the first to comment on "Tyler board rejects Mercator bid (November 12, 2007)"