Vancouver – ATW Gold (ATW-V) is walking away from a proposed merger with Kinbauri Gold (KNB-V).
ATW says it is exercising a clause in the letter of agreement governing the proposed merger that allows it to reverse course.
According to ATW the clause, or section 18(c), stipulates that if Kinbauri’s board of directors does not unanimously support the proposed merger it can terminate the agreement.
ATW contends that Kinbauri has not done so over the past three weeks since both companies proposed to merge.
The about face may stem from Kinbauri actions over a sweetened bid from its other suitor, Orvana Minerals (ORV-T).
Kinbauri had earlier rejected Orvana’s first takeover offer for the company at 55¢ a share. But then Orvana, after ATW and Kinbauri announced their plan to merge, put 75¢ on the table.
This time Kinbauri did not outright reject Orvana’s offer. Instead it suggested shareholders make up their own minds over which company, ATW or Orvana, was making the superior bid.
That lack of direction may have initiated, or at least helped justify, ATW’s latest action.
Now Kinbauri shareholders have a much simpler choice: Accept Orvana’s cash by July 31 or keep Kinbauri’s management at the helm.
On ATW’s news Kinbauri’s share price dropped 2¢ to 73¢ while Orvana’s share price jumped 8¢ to 76¢.