Iron ore trader Sinosteel Corp said yesterday it has raised its stake in Australia's Midwest Corp to 54 percent from 52.52 percent as its takeover offer is due to close today.
Beijing-based Sinosteel won control of Midwest on July 11 after a seven-month battle, fending off a rival bid from Murchison Metals Ltd, which has iron ore prospects near that of Midwest and claims a merger would yield significant synergy savings.
Sinosteel is unlikely to acquire 100 percent of Midwest in a A$1.36-billion (US$1.33 billion) all-cash offer as Murchison and several other shareholders refuse to sell their holdings.
Murchison dropped its offer to merge with Midwest early last week as it failed to win backing from Sinosteel. But it said it's not going to sell as it intends to play an active role in Midwest and will seek to maximize the value of its shareholding.
United States hedge fund Harbinger Capital, the main shareholder of Murchison, this week raised its stake in Midwest to 15.09 percent, while Murchison holds 10 percent.
Harbinger's and Murchison's holdings in Midwest would prevent Sinosteel increasing its stake to 90 percent, a level which would force minority shareholders to sell under Australian securities rules.
Sinosteel, which owns a 2.4-percent stake in Murchison, is also seeking approval from Australian authorities to raise it to more than 15 percent to accelerate the building of mine and port projects.
Sinosteel's bid, the first successful hostile takeover of an overseas firm by a Chinese state-owned company, is a key step for China to secure alternative iron ore supply for its mills on rising ore prices and fears the proposed takeover of Rio Tinto by BHP Billiton would strengthen the Australian ore miners' influence.
(Shanghai Daily July 18, 2008)
