Cathay Fortune to Abandon Bid for Discovery on Botswana ConcernsSoraya Permatasari
Chinese billionaire Yu Yong’s Cathay Fortune Corp. will not proceed with a bid to acquire Discovery Metals Ltd. over concerns related to the Australian company’s copper project in Botswana.
Cathay Fortune Investment Ltd., the bidding group that consists of Shanghai-based Cathay Fortune and partner China-Africa Development Fund will allow its offer, which closes Feb. 15, to lapse, it said today in a statement to the Australian stock exchange.
Discovery shares fell 3.3 percent to A$1.04, their lowest level since Sept. 7, at the close in Sydney today.
Cathay Fortune extended its A$1.70 a share offer period this week for a third time. The bid went hostile in October after Discovery rejected the offer as too low. Cathay Fortune held 15.18 percent of Discovery, according to a Jan. 29 statement from the Shanghai-based private equity firm, which would have valued the bid at A$702 million ($730 million).
Cathay Fortune extended its offer to study a downgrade in reserves and lower-than-expected ore grades at the Zeta deposit in Botswana, it said in a statement on Jan. 30. Discovery said in a statement today Cathay Fortune’s concerns were “ill-founded.”