Ten days ago Sherritt Coal Partnership II, an alliance of SHERRITT INTERNATIONAL CORP. and the Ontario Teacher's Pension Plan, said it would make a cash takeover bid for FORDING INC. It offered $29.00 per Fording share, an amount Fording considers too low. Fording countered by announcing that it would reorganize its assets into an income trust, saying the move will " unlock the value of the significant cash flow generated by the company and provide an enhanced platform for growth."
Fording is Canada's second largest coal producer. Sherritt is the largest by virtue of the fact it owns LUSCAR LTD.
The Sherritt Partnership delivered its takeover bid on Oct. 25, stating that the offered price represents a 25% premium over the 20-day average closing price of Fording shares for the period ending Oct 18. Fording acknowledged receiving the bid but still maintains that it is "considerably less than Fording's current trading price." Fording shares traded at $22 to $24 each during September and the first half of October. Today they were in the $32-plus-range.
Sherritt's offer is open until Dec. 27, 2002. There are complicated facets to the offer, but the bottom line might be: Will there soon be only a single large coal company in Canada?
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