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Baosteel and partner bid for Aquila
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BAOSTEEL Group Corp and an Australian partner have launched a bid for Aquila Resources in a deal that values the iron ore and coal miner at A$1.4 billion (US$1.3 billion).
The bid signals a renewed appetite by Chinese investors in global mining takeovers and could potentially open up a new iron ore export region in Australia for Asian steelmakers.
The bid also overrides concerns about an oversupply of iron ore as mining giants like Rio Tinto expandww 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 before yesterday’s notice. Aquila soared 36.33 percent to end at A$3.34 yesterday after trading resumed.
Baosteel, which already owns 19.8 percent of Aquila, will hold 85 percent if the deal succeeds while Aurizon will own 15 percent.
“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.
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 now and will form an independent board sub-committee to assess the offer.
Aquila is among smaller miners in Australia trying to break the hold of Rio Tinto and BHP Billiton on the country’s iron ore exports. It owns 50 percent in the West Pilbara Iron Ore Project.
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