China Minmetals makes $1.7 bln bid for Oz Minerals
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SHANGHAI, China: Chinese metals and minerals trader and producer China Minmetals Nonferrous Metals Co. has offered to buy debt-laden Australian miner Oz Minerals for 2.6 billion Australian dollars ($1.7 billion), the companies said Monday.
Coming just days after Aluminum Corp. of China said it will invest $19.5 billion in Rio Tinto Group, easing the Anglo-Australian miner's heavy debt burden, the offer underscores China's determination to clinch access to offshore mining resources.
Despite its own economic troubles, Beijing is finding the global downturn an apt opportunity for its cash-rich state companies to snap up foreign energy and resource companies at bargain prices.
Oz Minerals' board recommended that shareholders accept the cash offer, which values its shares at Australian 82.5 cents (53.5 U.S. cents) apiece, a 50 percent premium to their last traded price, according to a statement to the Australian Stock Exchange.
"The board has determined that Minmetals' cash proposal is in the best interests of Oz Minerals' shareholders and believes this is the best outcome for shareholders compared with any of the other options available to us," its chairman, Barry Cusack, said in a statement.
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Oz Minerals, Australia's third-largest mining company and the world's second-largest producer of zinc, was formed through the merger last year of Oxiana and Zinifex. Its shares traded at 55 Australian cents (36 U.S. cents) when they were suspended in November.
The miner, which also produces copper, gold, lead and silver, has sought to sell assets and slash costs, closing mines as it tries to conserve cash.
About A$1.2 billion ($778.6 million) in debt is due to be refinanced on Feb. 27. On completion of the takeover, Minmetals will repay its debts, resolving Oz Minerals' "present financial issues," the companies said.
The deal is subject to regulatory approvals by both the Chinese and Australian governments and completion of due diligence by Minmetals.
Minmetals, a state-owned mining, metallurgical, construction and investment corporation, has agreed to keep Oz Minerals' headquarters in Melbourne and to continue to operate its current operations, the Australian company's managing director, Andrew Michelmore, said in a statement.
This "in turn, will benefit employees and relevant local communities and also provide certainty to businesses beyond those operated by OZ Minerals," Michelmore said.
"Minmetals will provide a robust platform for Oz Minerals to realize its growth potential when market conditions permit," Minmetals chairman Zhou Zhongshu said in a statement.
In an interview last week, Zhou told the state-run newspaper China Daily that Minmetals planned to expand this year through overseas mergers and acquisitions.
"New opportunities for overseas investment and acquisitions are emerging as many international mining companies hit by the financial crisis see their market values shrinking," he was quoted as saying.
Staff in the media department at Minmetals' headquarters in Beijing refused further comment Monday.
Minmetals had $20.7 billion in revenue in 2008. The company has 44 subsidiaries in 15 countries.
Like Chinalco, Minmetals has ready access to financing from state-owned banks. The Oz Minerals takeover is to be financed through a long-term loan and its existing cash resources, it said.
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