Nikanor plc (AIM:NKR), controlled by Benny Steinmetz and partners, will merge with Katanga Mining Ltd. (TSX:KAT) to create a company with a combined market cap of $3.3 billion. Nikanor said that the merged company has the potential to become by 2011 Africa's largest copper producer and the world's largest cobalt producer. The new company will retain the name Katanga Mining.
Nikanor shareholders will own 60% of the merged company and Katanga Mining shareholders 40%. The new company will be traded on both the London and Toronto stock exchanges. The company will consolidate the adjacent properties in the Democratic Republic of Congo (Congo Kinshasa) owned by Katanga Minig and Nikanor, which were previously part of the same mine complex, to create a single-site operation. The company plans to develop a unified mine complex with annual output approaching 400,000 tons of copper and 40,000 tons of cobalt by 2011.
Katanga Mining will allocate shares to Nikanor and pay $452 million. Each Nikanor shareholder will receive 0.613 new Katanga Mining shares, and $2.16 per share in cash. The merged company will have a pro forma cash balance of $745 million.
The merger terms give Nikanor a price tag of ₤4.75 per share, a 25% discount on yesterday's closing price, and giving a company value of $2 billion, compared with its market cap of $2.7 billion.
Nikanor's main shareholders are Steinmetz' New Horizon Minerals Ltd., Oakey Invest Holdings Inc. (owned by Dan Gertler), Pitchley Properties Ltd. (owned by Moshe and Mandy Gertner), and two companies wholly by RP Capital Partners Cayman Islands Ltd. and Glencore International AG of Switzerland, which own 78.4% of the company altogether. Katanga Mining's main shareholders include Arthur Ditto, Tain Holdings Ltd., George Forrest, and RP Capital Entities. All these shareholders of both companies voted in favor of the merger.
Arthur Ditto will serve as president and CEO of the merged Katanga Mining.
Published by Globes [online], Israel business news - www.globes-online.com - on November 7, 2007
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