The intriguing battle for Consolidated Minerals took another turn this morning, with Brian Gillbertson’s Pallinghurst Investment fund abandoning its planned scheme of arrangement and launching a $3.30 per share, all-cash takeover offer for ConsMin – a price which is below ConsMin’s current market price (and below the value of a rival bid).

The best reason for the low-ball offer (and ConsMin’s subsequent recommendation in favour) is that Gilbertson must be considered a CEO of such talent, that instead of paying a takeover premium, Pallinghurst’s bid for ConsMin has been made at a “discount” to the prevailing price.

Why the ConsMin board has endorsed a takeover offer which is 12% lower than a rival bid (from Territory Resources) and 6% below the market value of the company immediately prior is a mystery. Although one suspects the ConsMin board aren’t big fans of the efficient market theory. ConsMin dismissed the Territory bid on the basis that Territory itself is only is worth only 39 cents a share (therefore valuing ConsMin at $2.56), even though the market currently values Territory at more than $1.14 per share.

In launching a takeover bid, Pallinghurst have changed the structure of their offer. Previously, Pallinghurst had been trying to merge with ConsMin by way of scheme of arrangement (which required court approval and 75% of ConsMin votes in favour of the deal). Realising that the 75% requirement was too high a mountain to climb, Pallinghurst are now opting for an off-market takeover with a 50.1% minimum acceptance condition. That way, they may be able to gain control of ConsMin notwithstanding Noble Resources’ 6% blocking stake.

As for the ConsMin board’s acceptance of the bid, that really must have shareholders scratching their heads. Although as Territory chief, Michael Kiernan noted on Tuesday, the ConsMin board have now virtually faded into irrelevance.

Of course, if Pallinghurst were to take over the company, ConsMin managing director, Rod Baxter will keep his job. By contrast, if Territory took over ConsMin, management changes will take probably take place across the board. Such is the ConsMin’s board’s preference for Pallinghurst’s lowball bid, they have even agreed to pay Pallinghurst a break fee of $5 million if a competing offer is made. This effectively increases the cost of ConsMin by $5 million for any other rival bidder and acts to discourage an auction for the company.

Break fees aside, one suspects there are a few more acts to go before this show is over.

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