The share price of CBH climbed up sharply this morning. It rose as much as 23%, or 8 cents, to 43 cents. CBH Resources has confirmed that it is in confidential discussions with Perilya Limited regarding a possible corporate transaction which centres on maximising the value of the respective groups' Broken Hill operations.
Seems like we have to be ready for roller coaster ride this season. Just the other day, on a volatile trading day, MGX went down from $3.35 to as low as $2.70 (intraday), just to go up again the next days. CBH was down sharply yesterday, to bounce back again today.
The difference is: I know today that CBH is in talk with Perilya; I still don't know what's the reason of MGX's dip the other day.
Today's news from the Sidney Morning Herald reported that the managing director of CBH, Bob Besley, said the companies were still examining the best possible way of combining. But he indicated the likely outcome was for Perilya to make a scrip bid for CBH at a premium to the target's share price.
It is understood Perilya has already run due diligence on CBH, but it might take a few weeks more for the companies to agree on the final price. CBH's largest shareholder, Toho Zinc, is believed to be supportive of the deal. Last year, it had pushed to oust the chairman of CBH, Jim Wall, over corporate governance issues.
Other parties, including an international miner, have also been examining CBH's books in recent weeks. It is possible a Perilya offer for CBH could draw out another bidder.
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