Key Highlights
- Proposed Acquisition: Fortescue Ltd (ASX: FMG) to acquire all shares in Red Hawk Mining (ASX: RHK) via an off-market takeover bid.
- Offer Details: Initial cash offer of A$1.05 per share, increasing to A$1.20 per share if Fortescue secures 75% of Red Hawk shares within seven days of the offer opening.
- Premium Valuation: The Increased Offer Price represents a 48% premium to Red Hawk’s 30-day VWAP and implies a total equity value of A$254 million.
Overview of the Offer
Fortescue, through its subsidiary FMG Pilbara Pty Ltd, aims to acquire Red Hawk at an attractive valuation:
- Initial Offer Price: A$1.05 per share, reflecting a 29% premium to the 30-day VWAP.
- Increased Offer Price: A$1.20 per share, a 48% premium to the 30-day VWAP if Fortescue reaches a 75% stake by 4 February 2025.
- Timing: The offer opens on 28 January 2025 and closes at 7:00 PM (AEDT) on 3 March 2025, unless extended.
Strategic Rationale
- Red Hawk owns the Blacksmith Iron Ore Project, an undeveloped resource of 243 million tonnes at 59.3% Fe grade.
- Located 30 km west of Fortescue’s Solomon operations, the project offers significant synergies and growth potential within Fortescue’s Western Hub.
Board Recommendation
The Red Hawk Board unanimously supports the offer in the absence of a superior proposal. An Independent Expert’s Report concludes the offer is fair and reasonable to shareholders.
Additional Deal Features
- Call Options: Fortescue has secured agreements with two major shareholders, TIO (NZ) Limited and OCJ Investment (Australia) Pty Ltd, for 19.99% of Red Hawk shares at the same pricing terms.
- Protections: The bid implementation deed (BID) includes “no shop,” “no talk,” and matching rights provisions, with a fiduciary out for competing superior proposals.
CEO Commentary
Fortescue stated that the transaction underscores its commitment to expanding operations in the Pilbara region, enhancing its resource base, and ensuring long-term growth.
Next Steps for Red Hawk Shareholders
Shareholders are advised to review the Bidder’s Statement and Target’s Statement before making decisions. The offer is open for acceptance as of 28 January 2025.
This acquisition aligns with Fortescue’s strategy to strengthen its position in the iron ore sector while delivering value to Red Hawk shareholders.
