Minmetals bid for Equinox Minerals rejected
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Minmetals Resources Ltd's C$6.3 billion ($6.59 billion) bid for copper miner Equinox Minerals Ltd ran into difficulty last week, when Equinox opposed the bid, saying it undervalued the company.
Craig Williams, president and CEO of Equinox, a Canadian-Australian company with copper mines in Zambia, said in a statement released Thursday that "Minmetals' announcement and its timing is clearly opportunistic and seeks to frustrate Equinox's offer for its Canadian rival Lundin Mining Corp."
Peter Tomsett, chairman of Equinox, added that the bid undervalued the company, especially given the continuing strength of copper prices.
Hong Kong-based Minmetals Resources, which announced last Monday that it would offer C$6.3 billion for Equinox, also said Wednesday that the Australian government had given its approval for the bid to go ahead.
Minmetals made an all-cash offer of C$7.00 ($7.33) per share, 23 percent more than Equinox's closing price of C$5.71 ($5.98) on Friday, April 1. Shares in Equinox rose after the bid was announced to nearly C$8 ($8.37), but fell to C$7.40 ($7.75) Thursday.
Minmetals Resources spokesman Richard Barton said Friday that Equinox's response was "entirely predictable," adding that the firm's offer of C$7.00 a share was "compelling and remains superior to the diluted Lundin alternative." But he declined to comment on whether the company would consider raising its offer price, according to Dow Jones.
Analysts say the deal, if successful, would help Minmetals strengthen its copper resources as well as partly relieving China's increasing demand for copper.
"The acquisition will make Minmetals gain control of Africa's largest copper resources," said Wang Lixin, a nonferrous metals industry analyst at Umetal.com Sunday.
"But whether the deal could be reached will depend on the Minmetals' final offer price and its competition with other emerging buyers," she added.
Chinese companies are encountering growing difficulties in acquiring resources overseas, due to a recent surge in global commodity prices and increased rivalry from India and Brazil. China's overseas mining deals fell by 55 percent to $4.5 billion last year compared with a year earlier, according to a report released by Ernst & Young LLP last month.
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