MARK BENDEICH, London | Friday
MINING group Billiton Plc announced an agreed C$1.7bn (US$1.2bn) cash bid for Canadian copper miner Rio Algom Ltd, trumping a hostile offer by Noranda Inc and Chile’s Codelco.
Billiton, seeking to diversify its portfolio into base metals, said Rio Algom’s board had recommended its offer of C$27 per share, giving the London-listed South African bidder some coveted mining assets in both North and South America.
One of the jewels in Rio Algom’s crown is the massive massive Antamina project in Peru. When completed in 2001, it will be the largest copper and zinc mine in the world.
”The quality and potential of the Rio Algom assets represent, for Billiton, a unique entry vehicle into the global copper and metals market,” Billiton chairman and chief executive Brian Gilbertson said.
Rio Algom chairman Gordon Gray said in the same statement he was happy with the premium offered by Billiton – 49% above Rio Algom’s closing price last Monday, the day before Noranda and state-owned Codelco pounced.
”We believe this offer reflects the value we have worked hard to build for investors, whilst our employees will benefit from joining a global company with the size and resources needed to compete worldwide,” Gray said.
Noranda and Codelco had offered C$24.50 cash per share. Rio Algom shares closed on Thursday at C$26.25.
Billiton, too small to go head-to-head with well diversified global giants like Rio Tinto, has been looking for just such an acquisition for some time.
Its business is heavily weighted towards aluminium, nickel, ferrometals and coal. The purchase of Rio Algom gives it a suite of base metal assets, including a rich vein of copper.
Billiton said its bid had won unanimous support from Rio Algom’s directors and that their agreement also included a break fee of US$45m and the right for Billiton to come back to the table if a higher offer was made. – Reuters