£651m Recommended Takeover of Kalahari Minerals by Taurus Mineral (a CGNPC-Nuclear Fuel Co and Cadfund JV)
On 8 December 2011, the Boards of Taurus Mineral and Kalahari announced a recommended cash offer for Kalahari. The Offer valued each Kalahari Share at 243.55 pence and Kalahari’s fully diluted share capital at approximately £651 million.
Kalahari was an AIM and NSX listed resource company with uranium, gold, copper and other base metal interests in Namibia. Kalahari’s key asset was its holding of 42.5% in ASX, TSX and NSX listed Extract Resources. Extract’s principal asset was the 100% owned Husab Uranium Project, which at the time contained the third largest known uranium-only deposit globally.
The bidder, Taurus Mineral, is a joint venture between CGNPC Nuclear Fuel Company (CGNPC-NFC), a Chinese integrated nuclear power company, and the China Africa Development Fund (CADFund). CGNPC, the parent company of CGNPC-NFC, has the largest installed capacity of nuclear power units under construction of any company globally, with current installed capacity of approximately 6.2 GWe, and another 20.8 GWe under construction.
Azure advised Kalahari during a protracted period of negotiations undertaken during a tumultuous period for the uranium sector. Following initial discussions in early 2011 with Rio Tinto (controller of the adjacent Rössing Mine) regarding the possibility of a transaction, on 8 March 2011, CGNPC-NFC announced a recommended possible offer for Kalahari at 290 pence. The Fukushima nuclear disaster occurred shortly afterwards on 11 March 2011, where the share price of comparable listed uranium companies (including developers and producers) subsequently fell by more than 50% on average. This led to an agreed re-pricing of the transaction to 270 pence, which was disallowed by the UK Takeovers Panel. Following an enforced blackout period under UK takeovers regulations, the parties recommenced discussions in October 2011 before announcing the recommended offer in December 2011. Under the terms of the Kalahari offer, upon the offer becoming unconditional, Taurus was also required to make a downstream bid for Extract Resources.
By early February 2012, Taurus had received 89.5% of valid acceptances under the Kalahari offer and announced it wholly unconditional. On 17 February 2012, CGNPC had received 94.8% acceptances and moved to compulsory acquisition of Kalahari, and launched an unconditional takeover offer for Extract Resources.
Azure acted exclusively as Kalahari’s financial adviser from the March 2011 possible offer announcement, until the eventual successful completion of the takeover by CGNPC-NFC in February 2012.