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SYDNEY, Nov 23 AAP

November 23 2012, 5:46PM

The board of Discovery Metals (DML) has urged shareholders to reject Cathay Fortune Investment's $1.70-a-share takeover offer after an independent expert concluded the bid was too low.

Discovery chairman Gordon Galt said the independent expert report prepared by KPMG found Cathay's offer - which valued Discovery at $830 million - was neither fare nor reasonable.

Mr Galt said the offer was "opportunistically timed to exploit a period of temporary share price weakness" coinciding with the exit of a big institutional shareholder from the company's share registry.

The bid also offered an insufficient premium of only 17 per cent to Discovery's closing share price of October 3, Mr Galt said in a letter to shareholders released to the market on Friday.

"The independent expert has concluded that the fair market value of a Discovery Metals' share is in the range $1.74 and $2.11," Mr Galt said.

But Cathay Fortune Investment Chairman Yu Yong said nothing in Discovery's statement or the independent expert's report had changed his view about the value of Discovery.

"We remain of the belief that our fully valued $1.70 cash offer per Discovery share provides full and compelling value for Discovery shareholders," Mr Yong said in a statement.

He said Cathay intended to provide a formal analysis next week.

Australian-based Discovery is focused on the exploration and development of the Kalahari copper belt in north west Botswana.

Discovery shares closed one cent lower at $1.69.