BC Iron Limited has launched a friendly cash and share offer worth around AUD 256 million for smaller rival Iron Ore Holdings Limited the second takeover in a month aimed at beefing up production in Australia’s main iron ore region.
Australian miners continue to rack up strong profits from iron ore despite falling prices this year, although many have been under pressure to improve efficiency in the face of uncertain demand from key buyer China.
Mining major BHP Billiton is expected to show that more than half its projected AUD 14 billion in fiscal 2014 profit will come from iron ore when it reports financial results on August 19.
Rio Tinto said last week that H1 profit from iron ore made up 92% of company wide underlying earnings of AUD 4.68 billion.
BC Iron is offering 0.44 of a share and AUD 0.10 in cash per IOH share, valuing Iron Ore Holdings stock at AUD 1.59 – a hefty 79% premium to prices over the last 60 days.
Mr Morgan Ball MD of BC Iron said that “We believe that combined with our existing business, IOH’s portfolio of long life iron ore assets in the world’s best iron ore address, presents us with an excellent opportunity.”
BC Iron’s proposal follows a successful move by China’s Baosteel Resources and Australian rail operator Aurizon Holdings Ltd to take control of the West Pilbara Iron Ore project after sealing AUD 1 billion takeover of Aquila Resources.
Source – Reuters