The Hunnu board has unanimously recommended that its shareholders accept Banpu’s bid in the absence of a higher offer.
The offer represents a 30% premium to Hunnu’s last closing price of $1.385 a share on September 8, 2011.
The proposed transaction would give Banpu control of Hunnu’s many coking and thermal coal deposits in Mongolia, including the Tsant Uul project in the South Gobi coal province which could be in production for next year.
Hunnu executive chairman Matthew Wood said Banpu’s offer represented a significant market capitalisation for the company.
“The cash nature of the offers will enable Hunnu shareholders and option holders to realise a premium value for their shares and options in a volatile and uncertain market,” Wood said.
Banpu gained a 12.39% stake in Hunnu last March, making it Hunnu’s largest shareholder. If this transaction is successful Banpu will acquire the remaining 88% of Hunnu’s shares.
The bid confirms industry speculation that Banpu was planning a cash offer for the Australia-based company, after Hunnu requested a trading halt last Friday pending a “significant” announcement.