BHP Billiton makes A$204m play for UMC
October 16, 2009
Resources giant BHP Billiton on Friday confirmed that it has made an A$204 million (R1.36 billion) offer for fledgling Australian iron ore producer United Minerals Corporation.
BHP Billiton said it has entered into an agreement under which BHP Billiton, through its wholly owned subsidiary BHP Billiton Minerals, will offer to acquire all outstanding shares in UMC for a cash consideration of A$1.30 (R8.68) per share by way of scheme of arrangement.
"In the absence of a competing proposal, the A$1.30 offer is final and will not be increased," it said in a statement.
Listed on the Australian Stock Exchange (ASX), UMC's current focus is exploring and developing high-value bulk commodities in Western Australia, including iron ore in the central Pilbara region and bauxite in the Kimberly region.
UMC's principal asset is the Railway iron ore deposit located directly adjacent to Mining Area C in Western Australia, owned by the Goldsworthy Joint Venture.
The Goldsworthy Joint Venture is 85 percent held by BHP Billiton.
But the BHP Billiton offer values UMC's share at less than the A$1.35 already offered by the China Railway Materials Commercial Corp Group for the 20 million shares, or an 11.4 percent stake in UMC.
That CRM deal was announced last month and was seen as a strategic move that could help UMC develop its iron ore deposits and obtain key contacts inside China.
However, UMC's directors now say that they have agreed to unanimously recommend BHP Billiton's offer which is conditional on the CRM placement not being completed in the absence of a superior proposal.
"The CRM transaction had a number of attractions for the company, but the BHP Billiton proposal crystallises value for all UMC shareholders now," said UMC chairman Alan Birchmore in a statement to the ASX.
BHP Billiton and UMC have also agreed to certain exclusivity and other provisions, including reciprocal break fees payable if the scheme does not proceed due to specified circumstances.
Ian Ashby, BHP Billiton Iron Ore president, said the acquisition was a natural fit within the company's Western Australia Iron Ore operations.
"BHP Billiton is the logical owner and developer of the Railway Deposit given the proximity to BHP Billiton's iron ore deposits, and established mine and rail infrastructure. This acquisition is consistent with our plan of capturing growth options to deliver long-term shareholder value," said Ashby.
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