In a string of highly publicised large takeovers, the Chinese steel company Sinosteel added to the tally today by launching a $1.2 billion hostile offer for iron ore miner Midwest Corporation.
This propelled the shares up by as much as 32% to a 52-week high $5.48 during the day. The stocks closed at $5.43, an increase of 30.8%.
Sinosteel originally launched the bid on 20 February 2008, but after having been rejected by the board, the Chinese steel company is now appealing to Midwest’s shareholders directly.
Sinosteel already holds 19.89% in Midwest, and is offering $5.60 per share for all the shares it does not already own, with a 50.1% minimum acceptance condition.
In response, Midwest advised its shareholders to take no action and will provide further advice once it has had an opportunity to consider the offer.
Back in February, the Midwest Board informed the market it considered a proposal from Sinosteel at $5.60 per share would undervalue the company and its prospects.
However, in today’s bid, Sinosteel’s president Tianwen Huang said he believed Sinosteel’s offer would be highly attractive to Midwest shareholders.
“We have made this offer directly to the shareholders as we firmly believe it provides Midwest shareholders with the opportunity to realise certain value in cash for their shares at a significant premium to historical trading levels, in an environment that remains highly challenging for the development of large scale resource projects,” he said.
Sinosteel said it had been a major partner and a long-time supporter of Midwest through participation in the Weld Range hematite and Koolanooka magnetite project studies and the provision of off-take support for Midwest’s Koolanooka direct shipping ore (DSO) project.
“Sinosteel believes that taking a direct interest in Midwest is a natural extension of its involvement with the company and shareholders should be given the opportunity to accept Sinosteel’s offer.
“The offer for Midwest reinforces Sinosteel’s continued commitment to Australia’s resource industry and, in particular, the development of the mid-west region of Western Australia into a major world-class iron ore production province which will create employment and opportunities for all stakeholders,” Huang said.
