Musgrave Minerals (ASX:MGV)'s board has unanimously advised shareholders to decline the all-stock bid presented by Westgold Resources (ASX:WGX), asserting that the offer undervalues the company and fails to account for its growth potential. The bid, which implies a value of $177.3 million, offers Musgrave shareholders one share in Westgold for every 5.37 Musgrave shares.

In a statement outlining its reasons for rejection, Musgrave highlighted several key factors. Firstly, the implied offer price is below the current trading price of Musgrave shares. Additionally, the board deemed the bid opportunistic given Musgrave's promising prospects and its ability to deliver immediate growth to Westgold. Moreover, the conditional and uncertain nature of the offer, coupled with potential adverse tax consequences for Musgrave shareholders, further contributed to the board's recommendation to reject the bid.

Musgrave's board emphasised that Westgold's (ASX:WGX) interest validates the quality of its Cue gold project, stating, "The recently released stage one pre-feasibility study for the Cue gold project illustrates a technically and financially robust project." Graham Ascough, the non-executive chair of Musgrave, expressed confidence in the inherent value of the Cue gold project and the extensive tenure of 310km2 held by the company in the Cue area of the Murchison Region.

Following the news of the rejection, Westgold (ASX:WGX) shares experienced a 6% increase to reach $1.43 per share, while Musgrave (ASX:MGV) shares fell 4% to 28 cents on Monday, indicating investors' scepticism regarding Westgold's motivations for the acquisition.

Despite Musgrave's clear preference for no bid, Westgold (ASX:WGX) urged Musgrave shareholders to accept the offer, citing the "strong strategic rationale" behind the proposed merger. Wayne Bramwell, the managing director of Westgold, emphasised that the company is an established and well-funded owner and operator of two processing hubs in the Murchison region. Bramwell further argued that the combination of Musgrave's assets with Westgold's infrastructure and operating teams would expedite and de-risk the development of the Cue gold project while providing Musgrave shareholders with immediate exposure to a larger, established gold producer in Western Australia.

The Westgold (ASX:WGX) offer is set to close on 24 July, allowing Musgrave (ASX:MGV) shareholders ample time to consider the bid and make their final decision on the proposed transaction. As the situation unfolds, market participants will closely monitor the outcome, anticipating the potential impact on both Musgrave Minerals (ASX:MGV) and Westgold Resources (ASX:WGX).