Calcutta, May 18: Naveen Jindals ambition to acquire Aussie coal miner Rocklands has suffered a setback after independent directors rejected the bid and asked shareholders not to subscribe to the offer made by the Indian company.
In a communication sent to the Australian Securities Exchange, the directors said the Jindal offer undervalued the firm and shareholders should not initiate any action on the offer.
The Jindals have offered to buy all outstanding shares of Rocklands, majority owned by Chinese entrepreneur Benny Wu, at Aus $0.25 a share, valuing the company at Aus $88 million.
The offer that opened on May 5 will close on June 6 unless further extended.
The directors also informed the shareholders that an independent expert has valued Rockland between Aus $0.36-0.62 per share, much more than what the Jindals were offering.
The acquisition drive by the Indian steel maker will require the support of its chairman Benny Wu, who holds about 52.91 per cent stake in the company.
Today, the Rocklands Richfield share closed at Aus $0.28 per share, higher than the Jindal bid price.
Jindal Steel and Power (Australia) Pty Ltd (JSPA), a wholly owned unit of the Indian company, holds a 14.46 per cent stake in Rocklands.
It has received the approval of the Foreign Investment Review Board of Australia to increase its stake above the 15 per cent threshold. The present offer is not subject to any condition the Jindals have not set any minimum acceptance threshold limit either.
Last year, too, the Jindals had proceeded with the Rocklands bid but the Aussie company turned it down then.
Rajesh Bhatia, a director of JSPA, is also a director on the Rocklands board because of the Jindals shareholding in the company.
Rocklands controls a series of high-grade coking coal deposits in the Bowen Basin of Queensland.