Cobalt 27 Capital Corp. investors object to Pala Investments Ltd.'s takeover offer, which recently sweetened the cash consideration to C$4.00 per share from C$3.57 per share, the Financial Post reported Oct. 4.
Investors said the cobalt assets are being taken away from them just as the price of the base metal, a key ingredient in electric vehicle batteries, has recently began to improve.
The increased offer came as the Canadian explorer twice postponed a meeting to tabulate the votes on Pala's initial offer in June. It was then followed by weeks of meetings with shareholders, most of them opposing the deal.
However, some shareholders previously against the sale have voiced their support. Despite analysts seeing the market outlook picking up for the metal, there is still uncertainty over the supply and demand for the metal.
Further, analysts cited in the Financial Post report were divided over the deal.
David Talbot, an analyst for Canadian investment firm Eight Capital, kept a price target of C$7.50 per share and added that the C$4.00 per share offer, which represented a total value of C$341.5 million, was a discounted price for Cobalt 27's assets valued at C$465.9 million, based on June 30 financial statements.
RBC Dominion Securities Andrew Wong, however, said Pala is paying a slight premium in valuing Cobalt 27's assets and debt at C$3.25 per share, versus the cash payment offered. Wong pegged a C$5.00 per share price target on Cobalt 27.
In a separate Oct. 6 release, Cobalt 27 said that advisory firms ISS and Glass Lewis recommended shareholders to vote in favor of the transaction.
ISS said the cash component of the deal delivers "immediate liquidity and value certainty in a volatile cobalt market." Glass Lewis, meanwhile, said the improvements were sufficient enough for shareholders to support the amended agreement.
