Thursday, March 31, 2011

Gold One International - Takeover offer on the way?

Gold One International (GDO) was issued with a 'Price and Volume' query (commonly referred to as a 'speeding ticket' on share trading forums) yesterday. Their response was posted this morning to the ASX and included some interesting information regarding a potential takeover offer. Bloomberg reports:
Gold One Mulls Acquisition; May Offer to Buy Out Minorities
March 31 (Bloomberg) -- Gold One International Ltd., the miner of the precious metal, said it’s assessing a possible acquisition and considering a transaction that could lead to an offer to buy out minority shareholders.

“No binding arrangements have been entered into in relation to the potential transactions” and no assurance can be given the deals will proceed, the Johannesburg-based company said in a statement today. The transactions, for which unidentified advisers have been appointed, don’t yet warrant disclosure as they are “incomplete” and confidential.

Gold One’s statement followed a query from ASX Ltd., the operator of Australia’s stock exchange, relating to a 31 percent surge in the company’s stock between March 16 and yesterday. Almost 8.6 million shares traded in Sydney today, the highest this year, and 7.9 million yesterday, compared with average daily trades over the past six months of 2.2 million.

The company cited a March 14 announcement that it will beat first-quarter output targets, and a good response to an international marketing campaign, among possible reasons for the gains. The creation of Goliath Gold Mining Ltd. and Gold One’s “low” valuation versus its peers may also have contributed, it said, adding the potential acquisition and minority buyout are examples of deals it evaluates from “time to time.”

Gold One’s stock traded on the Johannesburg exchange gained 14 percent to 2.90 rand in the three days to March 30.
GDO is listed on both the JSE (Johannesburg Stock Exchange) as well as the ASX. As per the Bloomberg article above GDO has seen some impressive gains over the past two week, but it is still undervalued against it's peers so not really surprising that an attempt to acquire the company has come about.

GDO has a market cap of approximately $343m at today's closing price of 42.5c on the ASX.

With plans for production in excess of 250k/oz pa (2011 target of 120k/oz pa) and a Gold resource over 20m oz it's going to take a larger offer to entice shareholders to offload their holdings. Of course at this stage there is still uncertainty about whether an official offer will be made.



BB.


Disclosure: Position held in GDO & GOLD. Not investment advice. Do your own research.
 

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