Zara Resources' Danny Wettreich is looking for beat-up mining and oil and gas juniors in need of a management shakeup.TODD KOROL/Reuters
A recently formed natural resource acquirer is trying to bowl over three juniors with just one takeover circular.
Zara Resources Inc. is offering a stake in its potential four-company enterprise to the three small resource companies' shareholders in an unsolicited bid.
While Zara is tiny, with a market-cap that would only reach $27-million (U.S.) if all three acquisitions were to proceed, its strategy is unusual.
The company is run by Danny Wettreich who moved to Toronto a couple of years ago after more than two decades in Dallas where he ran reverse merger and private investment businesses that spanned industries from technology to European art.
Now he's looking for beat-up mining and oil and gas juniors in need of a management shakeup, and he doesn't want to pay for paperwork. "We only have one circular and the costs are reduced accordingly," Mr. Wettreich.
"I'm not saying it can't be done, but it's curious, and I would think a very challenging proposition for the bidder to succeed with that," said Stuart Morrow, a Vancouver-based senior partner at Davis LLP. "He's got to persuade three boards of directors and three separate sets of shareholders on the wisdom of this."
Since the offers are not contingent on each other, the Canadian National Stock Exchange-traded Zara could acquire any of the companies – TSX Venture-listed Visible Gold Mines Inc., Greencastle Resources Ltd. and Altai Resources Inc. – or none of them.
Mr. Wettreich says he thinks his actions could lead to a proxy fight, but said that shareholders would curb executive pay, administrative costs and gain access to a diversified portfolio by accepting his offer.
Once Zara has a more sizable collection of companies, Mr. Wettreich said he will reassess which properties he wants to sell, which ones to try to fix and which to let lapse because they aren't worth pursuing.
Editor's Note: An earlier online version of this article incorrectly quoted Mr. Wettreich as saying he would reassess which companies he may sell. This has been corrected.