Forsys shares tumble 20 percent on nixed takeover

Wed Aug 26, 2009 10:47am EDT
 
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TORONTO (Reuters) - Shares of Forsys Metals Corp FSY.TO plunged 20 percent on Wednesday after the Canadian company killed its planned $579 million takeover by Belgium-based holding company George Forrest International Afrique (GFI).

Forsys, whose main asset is the Valencia uranium deposit in Namibia, announced the move on Tuesday. Its shares were halted during Tuesday's session.

The company had expected the $7-a-share takeover to close in February, but it was repeatedly delayed as GFI ran into trouble obtaining financing. Forsys said on Tuesday it was no longer in its best interests to grant further extensions.

Forsys has demanded a $20 million reverse break fee from GFI.

Laurentian Bank Securities cut its 12-month target on Forsys to $4.90 from $5.60 and maintained a "reduce" rating.

"We believe impact is negative but highlight that this may be potential for a new beginning," analyst Eric Lemieux said in a note.

He said the Valencia project has value, as it has an established mineral reserve, a mining permit, and is located in a good political jurisdiction.

Shares of Forsys were down $1.07 at $4.23 soon after the Toronto market opened. GFI is privately held.

(Reporting by Cameron French; editing by Janet Guttsman)