Sinosteel Corp is now the sole bidder in the takeover of Australian iron ore prospector Midwest Corp after Murchison Metals Ltd withdrew its offer to merge with Midwest.
Murchison said in a statement yesterday that, after talking with Sinosteel over the weekend, it decided to terminate the merger plan as it "is now clear" that Sinosteel will not support the merger on terms which would be acceptable to Murchison.
Murchison in May proposed a merger with Midwest via a share swap, which initially represented a premium to Sinosteel's A$6.38 cash (US$6.11) offer before Murchison's shares declined.
Sinosteel, which held 45.58 percent of Midwest as of last Friday, last month said Murchison violated Australia's corporate code as one American shareholder of Murchison bought Midwest shares without approval. The Australian takeover body ruled in favor of Sinosteel.
"It was disappointing that the merger would not proceed at this time given the tremendous value that both Murchison and Midwest believe could be generated by combining their assets,'' said Paul Kopejtka, executive chairman of Murchison.
A spokesman for Beijing-based Sinosteel said it's pleased with Murchison's move, and would now focus on pursuing its takeover and is confident it would gain more acceptances.
Still, Murchison said it wouldn't accept Sinosteel's A$6.38 offer in respect of its 10 percent stake in Midwest, as it intends to play an active role in the company and will seek to maximize the value of its shareholding.
Midwest was unchanged at A$6.38 yesterday, the same level as Sinosteel's offer price, ahead of Murchison's announcement.
Contract prices of iron ore, used to make steel, have risen for six consecutive years, prompting steel makers to secure more supplies.
(Shanghai Daily July 8, 2008)
