Nordex Explosives Ltd. (Nordex), a Canadian explosives manufacturer listed on the TSX Venture Exchange, and Société Anonyme d’Explosifs et de Produits Chimiques (EPC) entered into a private placement and subsequent going private transaction on June 15, 2016. EPC was to purchase Nordex shares for $0.12 per share.
However, subsequent to Nordex’s announcement of the EPC offer, Omnia Holdings Limited, through its mining division BME (BME), issued a press release on July 14, 2016, stating its intention to make an offer to acquire all of the outstanding shares of Nordex at $0.20 per share. As a response to BME’s higher offer, on July 18, 2016, EPC increased its original offer from $0.12 to $0.18 per share.
Even though BME’s offer provided a higher premium to Nordex’s shareholders, Nordex’s Board of Directors (Nordex Board) favoured EPC’s offer as they concluded BME’s offer to be contingent upon too many conditions. Specifically, BME’s offer required two-thirds of all outstanding Nordex shares to be tendered and afforded BME with multiple avenues to cleanly walk away from the deal. As a result, the Nordex Board has taken the position that the EPC offer was in the best interest of Nordex’s shareholders as it offered greater deal certainty.
In response, BME filed a take-over bid circular on August 3, 2016 relating to a bid for all the outstanding shares of Nordex at a price of $0.22 per share. This BME offer represents a 57% premium to the closing price of Nordex shares on July 13, 2016 of $0.09 per share. The Nordex Board is currently reviewing the unsolicited offer and has urged its shareholders to take no action at this time.
Nordex will be holding an annual and special meeting of its shareholders on August 12, 2016, where its shareholders will have the opportunity to vote on the EPC offer. In order to be approved, the EPC offer will require a two-thirds majority shareholder vote.