Nevsun Resources (NYSEAMERICAN: NSU) is having an overwhelmingly strong day in the market today after news broke that the company has declined a takeover offer. Of course, with the offer declined, investors see that there is a strong belief among the management team that the company is going to see substantial growth. Today, we’ll talk about:
- The offer;
- what we’re seeing from NSU after declining the offer;
- and what we’ll be watching for with regard to NSU ahead.
NSU Rejects Takeover Bid
As mentioned above, Nevsun Resources is having an overwhelmingly strong day in the market today as news breaks that the company has declined a takeover offer. In a press release issued by Lundin Mining yesterday, the company announced that it has made an offer to takeover NSU at a rate of C$5.00 per share. The proposal not only provided a significant premium, it would protect shareholders from dilution associated with Timok’s financing requirements and provide a focus on production enhancement and increased cash flow.
Nonetheless, while the premium is significant, NSU clearly believes that it will see substantial growth on its own. News broke that the company rejected the C$1.5 billion offer ($1.16 billion), saying that the offer was too low and came with a problematic structure. Nevsun also said that a previous offer made months ago with regard to engagement of Lundin was made but was also rejected.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In this particular case, the news proved to be overwhelmingly positive. Through the rejection of a takeover offer with a relatively strong premium, it’s clear that the management team at Nevsun sees better opportunities for shareholders ahead. So, it comes as no surprise that excited investors are sending the stock toward the top. At the moment (11:21), NSU is trading at $3.38 per share after a gain of $0.41 per share or 13.80% thus far today.
Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on NSU. In particular, we’re interested in following the story surrounding the company’s Timok project. We’re also interested in seeing if another offer is made with a stronger value to shareholders. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
Never Miss The News Again
Do you want real-time, actionable news delivered to your inbox? Join the CNA Finance mailing list below!