First Quantum Minerals (TSX:FM)(LON:FQM) is set to take control of fellow Canadian miner Inmet Mining Corp. (TSX:IMN) after announcing it was changing the terms of its hostile $5.1 billion takeover and extending the deadline by 10 days.
In a statement late Tuesday, Vancouver-based First Quantum said it has received strong endorsement from its smaller rival’s shareholders, as the majority of them tendered shares in favour of the offer, which was designed to create one of the world’s leading copper producers.
Earlier this year, Inmet’s board rejected a hostile takeover offer of Cdn$72 per share from First Quantum, claiming the bid was “financially inadequate” and would deprive its shareholders of the benefits expected from Cobre Panama, Inmet’s $6.2 billion copper and gold project in the Central American country.
But First Quantum said it modified the takeover proposal to allow the minimum tender condition to be satisfied if more than 50% of Inmet's outstanding shares have been deposited before the new deadline. The cash-and-stock offer was previously contingent on more than two-thirds of the shares being tendered in favour of the deal.
Under Canadian law, First Quantum needed to extend the offer period after adjusting the terms of the offer, which is now due to expire at midnight on March 21.
Financial Post’s Peter Koven believes the company played its hand perfectly, while Inmet made “a key strategic error.”
“As a result, First Quantum is on the verge of completing a hostile takeover for less money than almost anyone expected,” he writes.
The Vancouver-based miner holds extensive copper, nickel and gold assets throughout Africa and Australia, while Inmet mines copper and zinc in Turkey, Spain and Finland.
If the two companies combined, the entity would have a projected output of 1.3 million tonnes per year by 2018.
(Image courtesy of Kitchen Mischief)