It's been a long time coming and filled with no small amount of acrimony as Augusta Resource (TSX:AZC, Stock Forum) finally buried the proverbial hatchet and announced today that it had agreed to Hudbay Minerals' (TSX:HBM, Stock Forum) revised takeover bid.
The fur has been flying between the two entities ever since Hudbay snapped up 15% of Augusta's common shares in April 2013. No takeover bid was made at the time, but Augusta shored up its defense by adopting a shareholder rights plan to ensure that the board and the shareholders had adequate time to consider and evaluate any unsolicited takeover offer.
The gloves came off in February 2014, when Hudbay threw down with its announcement of an offer to acquire all issued and outstanding shares in the company and Augusta's board unanimously rejected Hudbay's bid.
By the end of the month, accusations were hurled that Augusta was technically insolvent and was a danger to investors if the company was unable to complete the permitting process at its Arizona copper project. Augusta's chairman returned that Hudbay had a track record of under-performance and was opportunistically low-balling an takeover offer to shareholders.
The companies remained adversaries since, but things changed when Augusta was yet again stymied at the end of May by the US Forest Service in its permitting of its Rosemont copper project located in Arizona.
With its flagship project to be delayed approximately 135 days, management looked at Hudbay's offer with new eyes and this time they sat down and jointly worked out a deal that was agreeable to both parties.
According to today's news release, Hudbay increased its consideration and under the revised offer, Augusta shareholders would also receive, in addition to the 0.315 of a Hudbay common share, a 0.17 of a warrant to acquire a common share of Hudbay for each Augusta common share.
Augusta board members have unanimously accepted Hudbay's revised offer, totaling an approximate equity value of $555.0 million, and have agreed to terminate the company's shareholder rights plan to permit shareholders to do so.
Hudbay president and CEO, David Garofalo, commented, “We are pleased to have reached agreement with the board and management of Augusta as we strongly believe in the merits of this transaction and its benefits to both companies' shareholders. We look forward to working with the board and management of Augusta to bring this transaction to a conclusion and to advancing the Rosemont Project within Hudbay.”
Company Executive Chairman, Richard Warke, added, “"After a thorough process to consider all of our alternatives, we are pleased to have agreed on a mutually beneficial transaction representing a successful conclusion to our value maximizing process,.”
He then concluded, “We believe this is a fair transaction for Augusta shareholders. Our agreement with Hudbay provides Augusta shareholders with an attractive premium for their shares and a stake in a growing intermediate base metals mining company with a portfolio of producing mines and development projects, including the world-class Rosemont Project.”
Augusta Resource was in the news recently when the company updated its permitting activites at Rosemont at the end of May.
Shares were up 8.12% on the news to $3.46 per share.
Currently there are 145.5m outstanding shares with a market cap of $503.3 million.