SYDNEY: Chinese iron and steel giant Baosteel yesterday said it was readying a takeover bid for Aquila Resources that values the Australian iron ore and coal firm at Aus$1.4bn ($1.3bn).
Baosteel Resources Australia, a subsidiary of the Chinese parent’s overseas development arm, and Australian rail freight operator Aurizon are offering Aus$3.40 per share in cash for the company.
The conditional off-market proposal represents a premium of 38.8 percent to Aquila’s close on Friday of Aus$2.45. Shares surged on the news and closed up 36 percent at Aus$3.34 yesterday.
Baosteel Resources International chairman Zhihao Dai said as the bidders had been unable to meet the Aquila board, they had decided to take the offer directly to shareholders.
“We believe this is a compelling offer for Aquila shareholders as it provides an opportunity for them to realise certain value for their Aquila shares at a significant premium to current market prices... at a time of uncertainty of the funding and development pathway for Aquila’s suite of greenfield projects,” he said in a statement.
He said the deal was in line with Baosteel’s strategy of building a leading global steel and resources business by developing Aquila’s Pilbara iron ore project in Western Australia and a hard coking coal development at Eagle Downs in Queensland.
Baosteel, which already has a near 20 percent stake in Perth-based Aquila, said the offer was designed to push progress on the projects the Australian firm was reportedly unable to secure funding for on its own. “After five years, we haven’t seen any projects started,” Baosteel Resources Australia Vice-President Wu Yiming said. AFP
