Mineral Resources (MinRes) managing director Chris Ellison has told Norwest shareholders they should accept his company’s $403 million offer.
In a sign of escalating antagonism between the companies, Ellison has taken out a full-page advertisement in the Australian Financial Review to refute the Norwest board’s assertion that the MinRes offer is “opportunistically timed” and does not properly value the company.
MinRes already owns a 19.9 per cent stake in Norwest and made an off-market bid to acquire the remaining stake on December 16 last year. Ellison subsequently called the offer a “no-brainer” that gave the company’s shareholders “a unique opportunity to join our MinRes family and be part of the next chapter in our significant growth”.
But the Norwest board last week rejected the unsolicited bid, saying it failed to properly recognise the value of the oil and gas company.
“MinRes is seeking to secure control of Norwest and its Perth Basin assets without paying an appropriate premium,” Norwest said in a statement.
“Accepting the offer would reduce shareholder exposure to the Lockyer project … while increasing their exposure to the risks associated with MinRes’ other businesses and commodities.”
The Lockyer project is a major gas discovery in WA’s Perth Basin that is seen as a future source of inexpensive gas to power downstream processing in the resources-rich state.
Ellison’s full-page ad is the latest chapter in an increasingly competitive battle for gas assets in the Perth Basin.
MinRes is also involved in takeover efforts of Warrego Energy, joining Gina Rinehart’s Hancock Prospecting in attempting to get its hands on a source of inexpensive gas for power generation and mineral processing, which will prove especially important as the resources sector faces a more difficult fossil-fuel market in coming years.
Writing in an open letter to Norwest shareholders, Ellison said the MinRes takeover offer would provide “exceptional shareholder returns” and that similar had earned other companies’ investors gains of more than 25 per cent a year for more than 10 years.