The Consolidated Minerals takeover battle has been raised a notch, with Michael Kiernan’s Territory Resources officially stepping into the ring yesterday, announcing a formal scrip and cash bid for ConsMin which values the company at $3.60 per share.

Following the offer, the ConsMin’s board reluctantly postponed the scheme meetings which were scheduled for yesterday — probably a wise move given that the Pallinghurst offer being considered at the meeting valued the company at 28% less than Territory’s offer.

Territory boss, Michael Kiernan seems to be enjoying himself, noting that he wasn’t fazed by the ConsMin board’s reluctance to endorse Territory’s offer. Kiernan told journalists that “we consider the board has been a total irrelevance for some time [and that] we’ve pitched our proposal quite squarely to the shareholders of ConsMin.”

Interestingly, The Age’s Barry Fitzgerald and the West Australian’s Michael Weir are both echoing ConMin’s line that Pallinghurst’s (now irrelevant) offer values ConsMin at $3.02 per share. Similarly, ConsMin chairman, Dick Carter, noted in ConsMin’s Revised Scheme Booklet (for the Pallinghurst deal) that Pallinghurst’s proposal valued the company at “$2.93 (based on CSM’s closing share price on the ASX) of $3.13.”

Those claims are simply wrong. Pallinghurst’s bid does not “value” ConsMin at $3.02 or $2.98 at all. Pallinghurst is offering $1.68 cash per share for 60% of ConsMin and is therefore paying an effective price of $2.80 per ConsMin share.

Therefore, the Pallinghurst offer does not value ConsMin at any more than $2.80 per share. Carter, Fitzgerald and Weir should know that the value of Pallinghurst’s bid does not increase simply because the 40% of ConsMin which Pallinghurst isn’t acquiring is trading above their offer price.

Using Carter, Fitzgerald and Weir’s bizarre logic, as the ConsMin share price increases, the Pallinghurst’s offer would become more “valuable”, even though the price they are paying for the stake becomes relatively cheaper.

If anything, the best way to described the scheme proposed by Pallinghurst is that it resembles a giant private placement of 60% of ConsMin shares at $2.80 per share.

Regardless of whether Pallinghurst’s offer is for $2.80 or even $3.02 per share, with $3.60 on the table, not to mention rampaging manganese prices, the ConsMin board would seem obligated to immediately withdraw their recommendation of Pallinghurst’s offer and either endorse Territory’s bid, or continue as a standalone entity to take advantage of the forecast profit growth. Anything less and ConsMin shareholders would start to wonder exactly whose interests the board is representing.

Disclosure: The writer has an economic interest in the performance of ConsMin