Sphere rejects Sin-Tang bid, prefers Xstrata
“Australian iron-ore developer Sphere Minerals Ltd has rejected a bid by closely held Sin-Tang Development Pte Ltd and recommended its shareholders accept Xstrata plc’s cash offer of A$514 million (US$520 million).
Sphere received a proposal from Sin-Tang to fund the Askaf project in Mauritania yesterday after the Australian markets closed and decided ‘to reaffirm its unanimous recommendation to accept Xstrata’s cash offer of A$3.00 per share,’ it said in a statement today. The offer isn’t superior to Xstrata’s, it said.
Sin-Tang’s ‘proposal provides no certainty as to the timing for completion of any transaction,” Sphere said. “The proposal does not address the development and funding requirements in respect of Sphere’s larger-scale Guelb el Aouj and Lebtheinia projects.’”
- Although Sin-Tang is based in Singapore, three Chinese businessmen control 95 percent of the company.
- Not going with the Sin-Tang offer fits in the trend of Australian companies seeking non-Chinese sources of money. However, last week a Chinese sovereign wealth fund has agreed to buy Caledon Resources in a move that goes in the opposite direction.
- Xstrata is trying to build a stronger position in iron ore production in order to benefit from the expected high iron ore prices. The company held $1.4bln cash after Q2 of 2010. The all-cash offer for Sphere will leave the company with little or no excess cash for further acquisitions.
©2010 | Wilfred Visser | thebusinessofmining.com