Boston, MA 04/28/2014 (wallstreetpr) – HudBay Minerals Inc Ord Shs (NYSE:HBM) is an integrated mining company with market value of $1.7 billion. The company announced bid to acquire Augusta Resource Corp. (USA) (NYSEMKT:AZC). However, the deal has been seen by the management of Augusta Resources as a hostile one and the company has called on its shareholders to a voting that could make things complex for HudBay.
The two mining companies do not agree on a number of issues that have seen the bid from HudBay generating more heat than light. HudBay’s offer values Augusta Resources at $407 million or about $2.80 per share. Already HudBay owns 16 percent stake in Augusta following its 23 million shares purchase.
Since the huge shares buying by HudBay, Augusta adopted what looked like a precautionary measure under shareholders right plan. It is the shareholders rights plan that now seems to be frustrating HudBay Minerals Inc Ord Shs (NYSE:HBM) as it seeks to acquire Augusta.
It is all about shareholder value
The issue that is stocking heat in the acquisition bid is shareholder value. While Augusta management believes that they could still pursue some other alternatives to maximize shareholder value in the company, HudBay believes its offer is in the best interest of the shareholders. Augusta reported entering into preliminary talks with some potential buyers outside HudBay that are already looking into its books. On that note, the company is trying to avoid the offer from HudBay Minerals Inc Ord Shs (NYSE:HBM).
Shareholder right plan
Meanwhile, as HudBay Minerals Inc Ord Shs (NYSE:HBM)’s offers nears expiry, the shareholder vote might mean that deal would be expensive for HudBay as Augusta would have the right to increase the number of its shares. And that will make the deal quite expensive for HudBay as it would have to buy diluted shares.
It remains to be seen what comes after the shareholder voting on May 2, about three days before the bid expiration.