Kenmare Resources rejects takeover proposal from founder, shares surge

(Sharecast News) - Kenmare Resources surged on Thursday as it confirmed it had rejected a 530p a share takeover proposal from a consortium led by Oryx Global Partners and former managing director and founder Michael Carvill. The offer represents a premium of 93% to the previous closing share price of 275p.

In a brief statement in response to recent press speculation, the company said the board had considered the terms of the proposal with its advisers and unanimously rejected it as it undervalued Kenmare's business and its prospects.

However, Kenmare has offered to provide the consortium with access to limited due diligence information in order to facilitate an improvement of the financial terms.

Kenmare said there can be no certainty that a firm offer will be made, or as to the terms of any such offer, should one be made.

Under Irish takeover rules, the consortium now has until 1700 GMT on 17 April to either announce a firm intention to make an offer or walk away.

At 1250 GMT, the shares were up 45% at 398p.

Berenberg said the premium offer was "eye catching".

"We have been hold-rated on Kenmare since 2023, since which point the shares have fallen circa 37%, with the view that free cash flow generation will be limited while it progresses further life-of-mine extension projects," it said.

"Our risked NAV stands at 448p per share, and our unrisked NAV stands at 585p per share. Mr Carvill knows the business incredibly well, having been its CEO from 1987 until leaving the company last year.

"In our view, the 530p per share all-cash bid was very compelling (which we would have taken) and we note that the best share price seen in recent history was 526p per share in 2022.

"Similar to Anglo American, we think that Kenmare's board and management would prefer to progress its strategy rather than sell at this point, which to us means that shareholders will need to be more patient to see value delivered.

"We see limited other rival bidders for Kenmare, although Rio Tinto is a potential bidder due to Kenmare's attractive ilmenite feed for its titanium dioxide business. However, having just closed the deal for Arcadium Lithium, we question whether Rio would be willing to pursue another transaction so quickly, even though the total value of the deal would be fairly immaterial for Rio."