TORONTO – HudBay Minerals Inc. (TSX:HBM) is extending its hostile takeover bid for Augusta Resource Corp. (TSX:AZC) and dropping its condition that shareholders holding at least two-thirds of the stock tender to the offer.
Under the extension, Augusta shareholders now have until 5 p.m. ET on April 2 to receive 0.315 of a HudBay share for each of their shares.
HudBay says the bid, which Augusta management has rejected as inadequate, represents a 62 per cent premium to the 20-day volume weight average prices of the two issues prior to the offer.
“The waiver of the minimum tender condition affords all Augusta shareholders the opportunity to accept the offer, which would not otherwise have been possible” as a result of efforts to frustrate it by “directors, officers and a small group of unnamed shareholders,” HudBay said Friday.
Vancouver-based Augusta said late last month that shareholders and insiders with about one-third of the company’s equity were rejecting the offer.
It said the offer, which originally valued Augusta at roughly $540 million, failed to recognize the value of the company’s Rosemont copper project in Arizona.
“Rosemont is a high-quality, world-class asset. We will not let HudBay steal this asset with this low-ball bid,” chief executive Gil Clausen said at the time.
HudBay has accused the August board of having been consistently overly optimistic about the Rosemont project and questioned whether the smaller company has the necessary expertise or resources to meet its targets.
“We continue to believe our offer is the most compelling choice for Augusta shareholders and we strongly encourage Augusta shareholders to tender their shares,” HudBay said in a statement.
It said the offer continues to be for all of the outstanding Augusta shares and “is not subject to any due diligence, financing or shareholder vote conditions.”
“Any and all Augusta shares tendered will be taken up and accepted for payment following expiry of the offer, regardless of how many Augusta shares are tendered, assuming the satisfaction or waiver of the remaining customary conditions.”
Meanwhile, HudBay said it plans to submit an application to the British Columbia Securities Commission to cease trade the Augusta shareholder rights plan “in due course.”
On the Toronto Stock Exchange, HudBay shares were down six cents at $8.15 on Friday afternoon, while Augusta stock was down two cents at $3.25.