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Caledon Resources set to be bought by China's GRAM in long-awaited acquisition

Coal producer Caledon Resources is pressing ahead with the long-awaited acquisition of the company by China's investment firm Guangdong Rising Assets Management Co (GRAM), it emerged today.
Caledon Resources set to be bought by China's GRAM in long-awaited acquisition

Coal producer Caledon Resources (LON:CDN) is going ahead with the long-awaited acquisition of the company by China's investment firm Guangdong Rising Assets Management Co (GRAM), it emerged today.

The acquisition is valued at £313 million and will be conducted through GRAM's 100 percent vehicle, Bidco. GRAM is one of the largest state-owned enterprises in China.

Caledon's share price was up 1.83 percent on yesterday's close in early deals, changing hands at 111 pence.

It comes after the announcement in November last year, when it was revealed that Caledon was in talks that could lead to such a deal and it also follows the long process that is Chinese regulatory approval.

Caledon shareholders will receive £1.12 in cash for each share and the acquisition values Caledon at around £313.1 million. The £1.12 offer per share is one which Caledon agreed in principle last year.

Broker Renaissance Capital said today that "all the pre-conditions of the original November 8th announcement have now been met and agreement to the bid terms has been made".

The price announced today represents a premium of about 34 per cent of the closing Caledon share price on 5 November last year (83.75 pence) - the last day of business before the offer was made - and 100 percent of the closing price of Caledon shares on 16 September 2010 - the last business day before the offer period.

Caledon said today that GRAM has received acceptances from 54 percent of shareholders.

GRAM chairman Mr Li Jinming said: "We are delighted to announce the acquisition of Caledon, which is a significant step forward in the implementation of GRAM's strategy of expanding its resource-focused investment activities.

"We are looking forward to working with Caledon's management in the future and to providing the necessary investment to substantially expand production in the years ahead."

Mark Trevan, Caledon's managing director said: "The Caledon share price has been supported by the prospect of this transaction during a time when the equities markets have been under some pressure.

"The announcement by GRAM of this recommended cash offer allows shareholders and CDI Holders to now crystallise that support by way of cash.

"For our employees, GRAM's commitment to growing the business will provide the financial resources for delivering our strategy as well as providing the opportunities that come with being part of a much larger organisation."

Polo Resources, which holds 29.8 percent of Caledon as well as £2.5 million of the firm's 8.5 percent unsecured convertible loan notes said today it would receive around £100 mln if the acquisition is completed.

Caledon is a coking coal producer and explorer focused on the Bowen Basin of Queensland, Australia. It acquired the mothballed Cook mine in late 2006 and has since recommissioned the operation and introduced a new underground mining method.

Caledon also purchased the nearby Minyango exploration concessions in 2006 and has completed a prefeasibility study on a potential underground coking and thermal coal mine at Minyango.

GRAM is an investment giant with interests in a range of listed and unlisted entities across sectors, including non-ferrous metals, technology and hotels.

It is the second largest shareholder of China Telecom and controlling shareholder of two Chinese listed companies. It has been active in the mining sector and last year acquired a 19.9 per cent interest in PanAust Limited, an ASX-listed copper and gold mine operator for A$215 million.

Guangdong Rising (Australia), referred to as “Bidco” for the purposes of negotiations, was formed by GRAM for the purpose of acquiring Caledon.

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