Regis quits Vault chase, clearing way for Genesis takeover

Australia's Regis Resources (ASX: RRL) has abandoned its pursuit of Vault Minerals (ASX: VAU), clearing the way for Genesis Minerals' (ASX: GMD) $3.9 billion (A$5.6-billion) takeover of the gold producer.

Regis said Monday it would not exercise its right to match or improve Genesis' superior proposal under a scheme implementation agreement signed with Vault on May 4. 

The company said the higher offer failed to meet its investment criteria and will receive a break fee of about A$50.7 million when the agreement is terminated.

"The Regis board concluded that the terms that would be required to match the Genesis proposal do not meet the value and return thresholds that Regis applies to all growth opportunities," the company said.

The decision ends a takeover battle that reflected growing consolidation among mid-tier gold miners as record bullion prices strengthen balance sheets and boost appetite for acquisitions. 

Genesis' unchanged offer values Vault at a roughly 6% premium to Regis' all-share bid and would create one of Australia's largest gold producers, with a market value of about A$12.6 billion and annual production of as much as 700,000 ounces.

Vault said it intends to terminate its agreement with Regis and enter into a definitive deal with Genesis. Genesis confirmed its proposal remains unchanged and open for acceptance once the Regis scheme is terminated.

Vault shares reversed early losses to trade up as much as 0.8% at A$4.91, while Genesis climbed as much as 3% to A$5.84, making it one of the strongest performers on the ASX 200. Regis shares were little changed.