When TerraCom (ASX:TER) made its takeover offer for Universal Coal (ASX:UNV) in early February, the latter company’s board tried its hardest to make itself as unpalatable as possible.

It initially raised concerns that the offer of 10c cash and 0.6 TerraCom shares per Universal share might significantly undervalue the company, urging shareholders to not take any action in relation to the unsolicited bid.

Universal’s board then commenced legal proceedings in the High Court of Justice of England and Wales to suspend all voting rights attributable to the shares that TerraCom had an interest in, or to direct TerraCom to divest its interest in shares it acquired under the bid.

By this stage, Universal’s shareholders had already voted with their feet as TerraCom could boast about 53 per cent of the voting rights attached to UNV shares from acceptances for its offer along with its existing shareholding.

The start of legal proceedings was followed by an interim stop order from the Australian Securities and Investments Commission that was lifted on March 12.

Universal then placed its shares in a halt in relation to what it described as a non-binding indicative offer from a confidential party.

This bid to stop TerraCom’s offer crumbled after the bidder declined to comply with the ASX’s requirement that its identity be revealed to shareholders.

Since then, the acceptances have been flying in despite Universal putting out its independent report declaring that TerraCom’s bid was neither fair nor reasonable and that shareholders should reject the bid.

The offer closed on Thursday with TerraCom now noting that it has just over 90 per cent of the voting rights attached to Universal shares and that it will move to the mandatory sell-out process before applying to delist Universal from the ASX.


TerraCom’s bid was the fifth takeover attempt in as many years, only one of which came close to success before being scuttled at the last minute after Coal of Africa – now MC Mining (ASX:MCM) – failed to prove that the combined entity would have enough working capital to relist.

Despite all this, TerraCom may not yet have succeeded in its hostile takeover as the legal proceedings initiated by Universal’s board are still hanging over the deal.