BEIJING – A subsidiary of China Minmetals, Minmetals Resources Ltd., has made a hostile bid for Vancouver-based Equinox Resources in an all cash offer of $7 per Equinox share. The offer represents a 33% premium on Equinox’s 20-day average ending April 1, 2011. The deal, worth approximately $6.3 billion, is the first hostile takeover attempt of a Canadian resource company by the Chinese.
Equinox is in the midst of its own hostile takeover of Lundin Mining of Toronto, and Equinox has scheduled a shareholders’ meeting for April 11 to approve the deal. Minmetals is urging Equinox shareholders to reject the Lundin deal, and tender their shares to Minmetals instead. Minmetals expects to finance the takeover with existing cash, long term credit and equity investments from Chinese institutions.
Minmetals says the acquisition of Equinox will extend the Chinese company’s production beyond 2030 with its first foray into the African copper belt and the Middle East. The Chinese would then control the Lumwana copper mine in Zambia. It is in production at a rate of 145,000 t/y of copper, but might be expanded to 260,000 t/y. Minmetals would also acquire Equinox’s Jabal Sayid copper-gold development in Saudi Arabia. It is being readied for production in 2012 at a rate of 249,000 t/y of copper concentrate.
Investment Canada will need to review the takeover, but as neither company has mines in Canada, the deal is expected to meet the “net benefit to Canada” test.
Details of the offer are available at www.MinmetalsResources.com.