Chinese company seeks to buy Mag for C$115 M

Toronto-MagIndustries Corp. said April 20 that it has entered into a definitive agreement pursuant to which Evergreen Industries Group, a diversified industrial company based in Shanghai, China, has agreed, subject to the terms of the support agreement, to make an offer to acquire all the outstanding MagIndustries common shares by way of a friendly takeover bid for C$0.25 per share in cash, valuing the company’s equity at approximately C$115 million. The offer represents a premium of approximately 64 percent to MagIndustries’s 20-day volume weighted average trading price of $0.15 on the Toronto Stock Exchange for the period ending on April 19, 2011. “Over a period of several years, MagIndustries has thoroughly reviewed, analyzed, and assessed all the possible options for the company to finance the Mengo project, and we have now come to the conclusion that the Evergreen’s offer is the best available option to our shareholders and to the company,” said Gerard Munera, Mag chairman. “We are delighted that a company of the financial and technical strength of Evergreen is going to take the Mengo project to the next stage of its development.” Mag has been trying to develop a potash project in the Congo. The support agreement provides for customary board support and non-solicitation covenants subject to customary “fiduciary out” provisions, and a reciprocal non-completion fee of C$3 million, payable if the acquisition is not completed in certain specified circumstances. In connection with the offer, all of the directors and officers of Mag have agreed to enter into lock-up agreements with Evergreen pursuant to which they will, among other things, agree to tender of all their Mag shares to the offer. The Mag board of directors, after consulting with its financial and legal advisors, has unanimously determined that the offer is fair, in the best interests of the Mag shareholders, and to recommend acceptance of the offer. BMO Capital Markets, financial advisor to the Mag board, provided an opinion that the offer is fair, from a financial point of view, to the Mag shareholders. The board has also deferred the separation time of the rights (as such terms are defined in the company’s shareholder rights plan) in respect to the offer, and will, immediately prior to the expiry of the offer, waive or suspend the operation of the shareholder rights plan in respect to the offer.