Gold miner Tietto rejects Zhaojin takeover bid

The news: ASX-listed West African gold miner Tietto Minerals has rejected a takeover bid by China’s Zhaojin, saying the offer undervalues the company and was “opportunistically timed”.

The numbers: Hong Kong-based Zhaojin this week made a 58 cents per share off-market offer for Tietto, valuing the company at $629 million. Zhaojin, a unit of the largest gold producer in China’s Shandong Province, is already Tietto's second largest shareholder with a 7% stake. Tietto shares are trading nearly 1% higher at 57 cents each.

The context: In a statement to the ASX on Friday, Tietto said its board had unanimously recommended that shareholders not accept the offer. The company, which owns the Abujar Gold Project in Côte d’Ivoire, said the bid materially undervalues its business and has been "opportunistically timed by Zhaojin" because it comes before performance improves at Abujar and Tietto finalises a feasibility study on a potential second mine in the area. In response, Zhaojin said it was disappointed with the rejection. “We believe the offer provides value and certainty for Tietto shareholders and we will continue discussions with the Board and Tietto shareholders on the merits of our proposal,” it said in a media statement.