Argosy shareholders will receive one new Baru share for every one Argosy share held.
Baru currently has on issue 49,796,009 shares and Argosy has on issue 126,029,105 shares. Baru will therefore issue 126,029,105 shares as consideration for the acquisition.
The Offer values Argosy at $0.038 per share based on Baru's closing share price on the ASX on 1 July 2013 of $0.038.
Baru has cash reserves and other receivables on hand at current date of $3 million, representing a net asset backing of approximately $0.06 per share.
The Argosy Board unanimously recommends that Argosy shareholders accept the Offer in the absence of a superior proposal. The takeover is supported by a majority of the Baru board.
The transaction would create an entity with net cash and semi-liquid reserves of $3 million held by Baru, combined with the potential of the Argosy graphite project in Namibia.
In addition, there should be a stronger allocation of resources with one combined entity with one less set of listing fees and less administrative fees.
Argosy shareholders will hold 72% of the combined group thereby enabling shareholders to retain material exposure to future upside of the Graphite Projects in Namibia.
The deal is subject to major conditions including a 90% minimum acceptance condition and all necessary regulatory approvals being obtained.
This merge appears on paper to be a good deal for both companies, it is not likely to be the last.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.