Fortescue, through its subsidiary FMG Pilbara, has entered a binding bid implementation deed (BID) with Red Hawk Mining to acquire up to 100% of its shares.
This acquisition will be conducted through an off-market takeover offer, with a base offer price of $1.05 per Red Hawk share, increasing to $1.20 if certain conditions are met.
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The offer implies a fully diluted equity value for Red Hawk of approximately $254m (A$406.48m).
The offer is subject to minimal conditions, primarily the absence of prescribed occurrences as defined in the BID.
FMG plans to free the offer from these conditions 14 days after acquiring a 50.1% interest in Red Hawk shares.
The offer is not contingent on financing or due diligence conditions and lacks a minimum acceptance condition.
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By GlobalDataRed Hawk has entered into the BID with FMG to present the offer to shareholders, with terms and conditions detailed in the announcement’s annexure.
The Blacksmith Pre-Feasibility Study, disclosed in May 2024, explored alternative funding for the Blacksmith Project, including corporate transactions and joint ventures.
FMG’s offer emerged as the most compelling, offering superior value compared with Red Hawk’s independent development of the project.
Red Hawk chairman Cheryl Edwardes said: “Having carefully considered the merits of the offer, the Red Hawk Board has unanimously concluded that the base offer price and the increased offer price are at an attractive level, with both representing a strong premium to recent trading, and that the offer is in the best interests of Red Hawk shareholders.
“Whilst we firmly believe that the Blacksmith Project has the potential to be a major iron ore project, there is significant cost, time and risk associated with developing a project of this scale, particularly in the context of an uncertain broader global economic outlook. As such, the Board believes that the offer provides shareholders with a compelling opportunity to de-risk their investment and realise certain value at an attractive premium to historical trading levels leading into the announcement of the offer.”
Red Hawk’s board believes the offer provides certain and immediate value to shareholders, outweighing the risks of independently developing a single project.
“The Board is very proud of the significant work completed by the Red Hawk team to date, including the publishing of the pre-feasibility study for a 5Mtpa [five million tonnes per annum] stand-alone mining operation at the Blacksmith Project, and believes that the offer is well-deserved recognition of this hard work and the significant value it has created,” Edwardes added.
