The board of Irish-registered exploration group Celtic Resources yesterday stood by its decision to reject a £161 million (€233 million) takeover offer from Severstal, despite the Russian miner writing to all Celtic shareholders offering to buy their stock.
Responding to the letter sent to shareholders and to the London Stock Exchange, where Celtic's shares are listed, a spokeswoman for Celtic said the offer still significantly undervalued the company. She said the letter was not an offer document and, as a result, the position of the board was still that the bid was not in the interest of shareholders.
"The board's job is to act for all shareholders and they will not be distracted from their duties."
In the letter, Severstal said that in the light of its desire to increase its ownership of Celtic beyond the 29.7 per cent it currently holds, it has decided to offer all Celtic shareholders the chance to sell their stock at the offer price of 270 pence each. In the event it doesn't achieve the 80 per cent of acceptances required for compulsory acquisition, a spokesman for Severstal said the company would call an extraordinary general meeting and issue a vote of no confidence in Celtic's management.
If this were to be successful, it would then run Celtic as a subsidiary of Severstal.
"You should be disappointed by your board's lack of consideration of our offer and its failure to embrace a value-creating transaction by rejecting an offer by Severstal Resurs that is public, is fully financed, is at a substantial premium, and is in cash," Severstal said in the letter.
"The Celtic directors are unnecessarily placing your money at risk by not recommending that you accept Severstal Resurs' attractive offer."
Celtic, which is listed in London but registered in Ireland, operates two gold mines in Kazakhstan, as well as having a 50 per cent interest in a Kazakh molybdenum mine and a copper and gold project in Russia. The company's management, board and employee benefit trust own 15 per cent of Celtic's stock.
Severstal, meanwhile, claims to have the support of 36.3 per cent of Celtic's total stock. Celtic's shares closed unchanged yesterday at 280 pence.
