Asarco sues Sterlite for backing out from acquisition agreement in 2008
20 Mar 2010
US copper miner Asarco LLC, which was the target of a year-long acquisition battle between Sterlite Industries and South American mining giant Grupo Mexico last year, has filed a lawsuit against Sterlite for backing out from its $2.6-billion takeover offer in 2008.
Tucson, Arizona-based Asarco, which exited bankruptcy in December 2009 after a US district court in Brownsville, Texas, ruled in favour of Grupo Mexico over Sterlite's bid for Asarco, said in its lawsuit filed this week that with Sterlite backing out from its $2.6-billion takeover agreement with Asarco in 2008, the company had incurred unnecessary costs on attorneys fees, marketing, and other related costs.
Sterlite Industries, a subsidiary of London-based metal and mining conglomerate Vedanta Resources plc, had in May 2008, agreed to acquire Asarco, a mining, smelting and refining company, for $2.6 billion (about Rs11,000 crore), in cash. (See: Sterlite to acquire third-largest US copper producer Asarco for $2.6 billion)
Asarco, a subsidiary of the Mexican company Grupo Mexico had filed for Chapter 11 protection in the US in August 2005 after plunging copper prices and a strike against its Arizona mines that crippled its operations.
After Sterlite lost out in the acquisition battle to acquire Asarco in December 2009, (See: Grupo Mexico regains control of US copper mine Asarco, after Sterlite loses legal battle) the Mumbai-based company filed an appeal against the court ruling in favour of Grupo Mexico's $2.5 billion bid for Asarco.
Grupo Mexico, which bought Asarco in 1999, lost control of the mine in 2005 after it failed to meet over $1 billion in litigation in environmental cleanup cases for its abandoned mines and refineries.
In March 2009, Sterlite revised its original May 2008 $2.6 billion offer down to almost half at $1.5 billion after the miner was forced to cut the acquisition price in the wake of plunging copper price globally. (See: Sterlite likely to slash Asarco bid to $1.5 billion)
The revised $1.5-billion offer by Sterlite brought Grupo Mexico into the fray, which saw both companies pitched in a year-long bidding war, till Grupo Mexico was named the winnerin a US lawsuit.