HONG KONG â€" Baosteel Group, one of China’s biggest steel makers, is leading a $1.3 billion takeover bid for the Australian miner Aquila Resources as Chinese companies continue their global search for raw materials.
Baosteel, a state-owned company and the parent of the Shanghai-listed Baoshan Iron and Steel, has teamed up with Aurizon Holdings, Australia’s largest rail freight operator, in bidding for Aquila, which is developing a giant iron ore mine in Western Australia’s mineral-rich Pilbara region.
The bidders are offering 3.40 Australian dollars, or $3.15, for each share of Aquila they do not already own, Aquila said Monday in a stock exchange filing. That represents a premium of 39 percent to where Aquila’s stock closed on Friday â€" at 2.45 dollars per share â€" and values the company at 1.42 billion dollars.
Baosteel has invested in Aquila since 2009 and holds a 20 percent stake in the company. If successful, the takeover offer would leave Baosteel owning 85 percent to 90 percent of Aquila, with Aurizon taking up the remaining stake.
Aquila owns 50 percent of the West Pilbara Iron Ore Project, a mine with a budgeted development cost of more than $7 billion that is expected to produce 30 million tons of ore for export annually, once it opens. AMCI, a privately owned Australian resources investor, and Posco Group, a South Korean company, control the other half of the West Pilbara project, which aims to meet demand for iron ore, a key input for making steel, from fast-growing economies in Asia.
Since Baosteel made its initial investment five years ago, “Aquila has had numerous confidential discussions with the Baosteel Group about its potential direct participation in the West Pilbara Iron Ore Project,†Tony Poli, Aquila’s executive chairman, said Monday in a news release. “However, the unsolicited proposal, to acquire control of Aquila, is a new development.â€
Aquila, which is being advised by Goldman Sachs, said it would form an independent board subcommittee to evaluate the bid. Baosteel and Aurizon have already applied for approval for the proposed takeover from Australia’s Foreign Investment Review Board and are “highly confident†of receiving approval, the companies said in a statement.
Baosteel is being advised on the deal by Deutsche Bank while Aurizon has hired Satori Investments and UBS.
