The Mineral Resources Ltd (ASX: MIN) share price is trading lower on Friday after market weakness offset a positive announcement.
In morning trade, the miner and mining services company's shares are down 3% to $79.29.
Image source: Getty Images
Mineral Resources share price lower despite acquisition plans
This morning, Mineral Resources revealed that it plans to make an off-market takeover bid to acquire the Norwest Energy NL (ASX: NWE) shares that it does not already own.
Norwest Energy is the company's minority joint venture partner in the Lockyer Deep gas project in the Perth Basin.
According to the release, Mineral Resources intends to offer one fully paid ordinary share for every 1,367 Norwest shares held on the register date.
Based on the Mineral Resources share price at yesterday's close, this implies an offer price of 6 cents per Norwest share. This is a premium of 33.3% to its last close price and values Norwest's equity at $403 million.
Unsurprisingly, the Norwest Energy share price is taking off this morning and is up 28% at the time of writing.
Why is it acquiring Norwest Energy?
Mineral Resources' managing director, Chris Ellison, sees huge potential from the Lockyer Deep gas project. He said:
MinRes has become one of Australia's most successful companies because of our ability to identify and act early on opportunities that benefit all of our shareholders.
The significant conventional gas discovery we made at Lockyer Deep last year, which we believe may be the largest onshore gas find in Australia, is driving us to develop and commercialise this high-quality energy source as quickly as possible.
Ellison believes the offer is attractive for Norwest Energy shareholders and expects the transaction to create significant value. He added:
The scrip-based Offer for our JV partner Norwest will consolidate Lockyer Deep's project ownership and provide Norwest Shareholders with exposure to a bigger prize. It is also a natural progression that can create lasting value for both groups of shareholders under the MinRes ownership umbrella.
This Offer presents a compelling and unique opportunity for Norwest Shareholders to join the MinRes family and be part of the next chapter in our significant value creation.
