Iron Bridge Resources Inc.'s board of directors recommended that its shareholders reject Velvet Energy Ltd.'s buyout offer, unanimously concluding that the proposed deal is not in their best interest.
Following a review of the offer, the board determined that it is "predatory," undervaluing the company and resulting in the transfer of future upside from its assets to Velvet Energy "at the expense of Iron Bridge shareholders." A potential white knight, or a friendly acquirer that would circumvent an attempted hostile takeover, and strategic capital partners have also emerged and the company is holding out for better alternatives.
"Velvet has demonstrated that it has no interest in negotiating a transaction and it commenced its tender offer in the hopes of trying to grab Iron Bridge cheaply," company executives said in a letter to shareholders. Iron Bridge's largest shareholders, holding a combined 36% of its outstanding common shares, have expressed their support in rejecting the offer.
Iron Bridge in May received an offer from its fellow Canadian oil and gas producer to acquire all its outstanding common shares at 75 Canadian cents per share in cash.