The Independence Group NL (ASX: IGO) share price climbed higher today after its takeover bid for Panoramic Resources Ltd (ASX: PAN) was unanimously rejected.
Why did the Independence Group share price rise?
In an announcement made to the ASX on Thursday morning, Panoramic Directors unanimously recommended that shareholders reject the unsolicited, highly conditional off-market takeover bid by Independence Group.
The Panoramic Resources share price had previously jumped 30 per cent higher in early November when the proposed takeover was announced.
Independence Group's offer had an implied price of 47.6 cents per share – a 42 per cent premium on Panoramic's pre-offer closing price.
However, the deal was always in question after Independence went straight to shareholders after unsuccessfully trying to engage the Panoramic board.
Independence Group shares climbed 1.04 per cent higher to close at $5.84 per share following the rejection.
Why did Panoramic reject the takeover proposal?
Panoramic's unanimous rejection recommendation was due to a number of key issues.
The nickel miner believes Independence's proposal is "opportunistically timed" and could deprive Panoramic shareholders of future potential value. The offer price would have taken advantage of a recent surge in the Independence Group share price.
Independence Group shares have rocketed 36.45 per cent higher in the last 6 months alone.
Panoramic shareholders would have held less than 10 per cent of the combined entity if the deal was approved. That would mean lower exposure to Panoramic's assets and less upside potential through dilution.
Management also cited lower nickel exposure through the combined group as a key issue. Shareholders could also miss out on a potentially higher third party offer if they accept Independence's deal.
Panoramic remains in a trading halt after the rejection and subsequent capital raising announcement. Independence is not participating in the raising but did note it is a breach of its takeover offer terms.
Foolish takeaway
Independence Group shares climbed higher on the rejection news but I don't think we'll see the same for Panoramic.
Given the 30 per cent share price jump when the takeover deal was announced, the Panoramic share price could be under pressure when it returns to trade this week.
