China's Baosteel and Aurizon Holdings launch A$1.42-bn joint bid for Aquila Resources
05 May 2014
China's Baoshan Iron & Steel Co Ltd (Baosteel) has teamed up with Australia's rail freight company Aurizon Holdings Ltd to launch an A$1.42 billion unsolicited bid for Australian resource company Aquila Resources Ltd.
Baosteel and Aurizon are offering to pay $3.40 in cash per share, a 38.8-per cent premium to Aquila's closing price of A$2.45 per share on 2 May 2014.
The bid is subject to a minimum acceptance condition of 50 per cent of Aquila's stock.
Post closing, Baosteel, which already holds 19.8-per cent stake in Aquila, will hold 85 per cent and Aurizon 15 per cent.
Baosteel, China's largest steelmaker and the world's third largest steel producer, had acquired the stake in Aquila for around $240 million in 2009 in order to secure supplies of iron ore, coking coal and manganese. (See: Baosteel acquires 15-per cent stake in Australian iron ore miner Aquila Resources)
Baosteel and Aurizon decided to take their offer directly to Aquila shareholders after failing to secure a meeting on Sunday with Aquila's executive chairman Tony Poli, who holds 30 per cent stake in the company.
Aquila said that it will form an independent board sub-committee to consider and evaluate the proposal and any resulting takeover offer and will update shareholders in due course.
Aquila explores and develops metallurgical coal, iron ore and manganese. Since listing on the Australian Securities Exchange in 2000, Aquila has grown rapidly and now holds a portfolio of bulk commodity assets.
The Perth-based company is developing two major Australian projects. It holds a 50 per cent stake in the Eagle Downs Hard Coking Coal Project, and the West Pilbara Iron Ore Project.
Eagle Downs is an underground longwall coal mine, located in the Bowen Basin, Central Queensland. Construction is underway, and is expected to be complete in the first half of 2017.
The mine, which has 254 million tons in reserves, is expected to have a 47 year mine life, with a peak production rate of 5.9 million tons annually.
The West Pilbara Iron Ore project is one of the largest independently owned undeveloped direct shipping iron ore projects in Australia and, once developed, will be a large contributor to seaborne iron ore supply.
The mine has proven reserves of around 445 million tones of iron ore and has an estimated mine life of around 15 years.