Chinese-held Singapore firm upsets Xstrata's plan to acquire Sphere Minerals

Swiss diversified mining group Xstrata may see its $428 million takeover offer for Sphere Minerals slip away after shareholders began pulling their acceptances. The Swiss mining giant was forced to raise its offer after a Singapore firm bought into Sphere Minerals, putting the deal at risk.

Sphere Minerals, a West Africa-focused iron ore company, is listed on the Australian Securities Exchange.

Singapore-based Sin-Tang Developments, early this month, acquired 8.6 per cent of Sphere. Sin-Tang, which is 95 per cent backed by three Chinese businessmen, had last week upped its stake to a blocking 10.77 per cent.

Xstrata, based in The Lug, Switzerland, today said it would allow its $2.50 per share bid to lapse if it failed to get 50 per cent stake in Sphere before the bid closed on 12 November 2010.

Xstrata also saw its holding in Sphere fell this week to 8.21 per cent from 8.38 per cent, after Xstrata extended the offer period from 29 October to 12 November 2010. Directors of Sphere, who hold around 5.46 per cent stake, had committed to Xstrata's offer.
In order to lure Sphere shareholders, Xstrata made its offer unconditional and reduced the payout time to Sphere shareholders from five business days to three business days.

On 24 August, Xstrata had proposed to acquire Sphere for A$2.50 per share in cash, valuing the iron ore explorer at approximately A$428 million ($383 million). (See: Xstrata to buy iron ore explorer Sphere Minerals for $383 million)