Rockwell Says Hostile Pala Bid Disappointing

Rockwell Diamonds called on shareholders to hold off on an $85.7 million unsolicited takeover bid by Pala Investments Holdings calling the offer opportunistic as it was lower than an earlier bid from last month.

Pala, which owns a 19.9 percent stake in Rockwell, offered to buy all of Rockwell’s outstanding shares at 36 cents per share. Rockwell, which has 238.04 million shares, has a market cap of $78.55 million. The company’s Toronto-traded shares closed at 33 cents on Tuesday.

In a bid from late August Pala had offered to buy the shares at 40 cents per share with a September 5 deadline. The new offer expires on November 10 and is conditional on the investment company acquiring two thirds of Rockwell and a due diligence review.

"We are disappointed that Pala has announced this unsolicited, opportunistic offer for Rockwell and we recommend shareholders take no action until shareholders have received further communications from the Board of Directors of Rockwell," John Bristow, president and chief executive of Rockwell said in a statement released on Wednesday.

The company’s board of directors advised Pala they would carefully consider the original proposal and anticipated being in a position to respond by the end of the week, Rockwell said.

Rockwell owns four alluvial, or river-bed, diamond projects and properties in South Africa, including Holpan, Klipdam, Saxendrift, and Wouterspan, and an alluvial project in the Democratic Republic of Congo.

Pala Investments, based in Jersey, Channel Islands, is an investment company with a focus on mining and natural resources.