Allegiance - Zinifex Takeover Battle

Disclosure : I sold all my Allegiance shares yesterday at $1.045 per share, and bought Tassal Group (TGR) with half of the money at $3.35.


The first takeover I've experienced, and it was a bit messy!!

I bought some Allegiance Mining (AGM) shares few months back at around $0.69 per share. I was interested in the story and was eager to wait for their first production on the first quarter of 2008. Then came along Zinifex with their two tier offer of $0.90 and $1 per share. It sent the share price up to around $1.05 and there was so much excitements, at least at the start.

Now, the takeover battle between Zinifex and Allegiance Mining continues with more arguments:

1. Starting from Zinifex bid to Allegiance, Zinifex (ZFX) has offered $775 million for AGM.

• This represents 41% premium on AGM value at the time of the bid.

2. AGM management told Zinifex to 'nickel off'

3. AGM lost $7.9 million on market punt.

• Zinifex told the media it was calling for Allegiance to fully disclose its alleged trading in small capitalisation stocks and a $7.9 million loss in leveraged share trading.
  The AFR said Allegiance has been "in the business of punting tens of millions of dollars of shareholders' money on highly speculative stocks".
• The report said the trading came undone during last month's horror day on the stock market, dramatically dubbed "Black Tuesday", January 23, when world markets fell sharply.

4. Zinifex's two weeks bid extension

• On the morning of 8 February, Allegiance publicly expressed its concern that the market was not informed about Zinifex's intentions and invited Zinifex to inform the market, but Zinifex made no public statement until approximately 7.30pm when Zinifex advised the market that its offer had been extended. This was of course some 30 minutes after the offer would have closed if it had not been extended

5. Lion Selection (LST) 'accidental' acceptance of Zinifex bid

• AGM said yesterday that it lodged a complaint about ZFX's tactics in extending its bid last Friday at the last minute. It claimed yesterday that Lion Selection, which accepted the ZFX offer, 'had concerns' about the situation.

6. No third party is currently conducting due diligence or in negotiation with Allegiance.

• Allegiance was advised that the relevant third party had ceased its due diligence and would not be submitting a proposal as it was unable to comply with the timetable and deadline that Allegiance had required. As a result, no third party

7. AGM has taken the matter to the Takeovers Panel

• Allegiance Mining NL (“Allegiance”) advises shareholders that it has made an application to the Takeovers Panel in relation to the off-market unsolicited takeover bid for Allegiance announced by a wholly owned subsidiary of Zinifex Limited (“Zinifex”) on 17 December 2007

8. Just read at the AFR today that Zinifex likely to pull the bid

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Apparently, takeover can be pretty ugly :)