The board of Vancouver's Rockwell Diamonds Inc. (TSX:RDI) has recommended its shareholders to reject the unsolicited takeover bid by Pala Investments Holdings Ltd. made earlier this month.
Pala, a U.K.-based investment company, had made a cash offer of $0.36 per share for all Rockwell's outstanding shares, valuing the company at $85.7 million. The deal represented an 83.5% premium over the company's volume-weighted average trading price over the previous 20 days prior to the September 9 announcement of the deal.
Rockwell's board said the deal undervalues the company's upward potential and is not in the best interests of shareholders.
Pala had been increasing its stake in the company to approximately 20% by the time it made the unsolicited bid.
Rockwell Diamond's share price range during the past week: between $0.29 and $0.31; 52-week high: $0.70; 52-week low: $0.16.