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Baosteel tables takeover bid for Australian mining firm
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Baosteel Group Corp, along with an Australian partner, has launched a bid for Aquila Resources in a deal valuing the iron ore and coal mining firm at A$1.4 billion (US$1.3 billion).
The bid signals a renewed appetite by Chinese companies for global mining takeovers and could potentially open up a new iron ore export region for Asian steelmakers.
That's despite concerns about an iron ore oversupply as mining giants like Rio Tinto expand while China's economy slows.
Shanghai-based Baosteel and rail freight operator Aurizon Holdings will offer A$3.40 a share for shares they don't own in Aquila, a 39 percent premium to its last closing price, according to a statement today.
Baosteel, which already owns 19.8 percent of Aquila, will hold an 85 percent stake if the deal is successful. Aurizon will own 15 percent if the deal goes through.
“This proposal represents an unprecedented opportunity to co-develop world-class rail and port infrastructure in Australia, utilizing Chinese and Australian capital, to deliver much needed Australian commodities to China,” Aurizon Chief Executive Lance Hockridge said.
Trying to ease concerns about oversupply, Hockridge also said Baosteel needs quality iron ore at competitive rates to underpin its growth.
Aquila is among a group of smaller miners in Australia trying to break the stranglehold of Rio Tinto and BHP Billiton on the country's iron ore exports. Aquila owns 50 percent in the West Pilbara Iron Ore Project, one of Australia's largest undeveloped iron ore projects. The company has also been selling assets to secure financing for new mines.
Baosteel and Aurizon decided to put the offer directly to Aquila shareholders after failing to meet Aquila's chairman and biggest shareholder, Tony Poli, over the weekend. Aquila advised its shareholders to take no action until an independent board sub-committee had assessed the offer.
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