Australian miner WMC Resources rejected an improved takeover offer from Anglo-Swiss giant Xstrata on Thursday and said it would concentrate instead on joint venture projects.
Xstrata on Wednesday raised its bid from AUS$6,35 a share to AUS$7,20, valuing WMC at more than AUS$8,4-billion (US$6,51-billion) and representing an increase of one billion dollars from the AUS$7,4-billion initially offered.
The WMC board said it believed investors could do better than Xstrata’s revised bid, which was at the lower end of an independent valuation putting the company’s worth at AUS$7,17-8,24.
WMC Chief Executive Andrew Michelmore said Xstrata could be forced to push its bid higher.
”Naturally, Xstrata remains focussed on acquiring WMC at the lowest possible price,” Michelmore said.
”While Xstrata has increased its offer and labelled this a final bid, it has clearly flagged it may pay more if forced to by another bidder.”
Michelmore said the board had ”declined to endorse” the offer and would consider all options to secure the best outcome for shareholders.
He said discussions with companies regarding expansion plans for WMC’s Olympic Dam Australia would now be expanded to encompass potential value-adding proposals around the whole company.
”The visits hosted at Olympic Dam and the greatly increased focus on the uranium market have confirmed our view of the genuine interest in WMC’s strategic assets,” Michelmore said.
Xstrata’s offer remains subject to various conditions, including obtaining foreign investment approval from the Australian government, which Treasurer Peter Costello said would be decided within weeks.
Analysts said a decision was likely to be made before Xstrata’s offer closes on February 28 and no rival bids would emerge before potential suitors knew whether the government was going to block Xstrata’s move.
”Why compete when the Xstrata bid could be sunk in a few weeks anyway?” Tolhurst Noall client adviser Marcus Padley said.
Xstrata described WMC’s announcement as ”no more than a holding statement that seeks to preserve their position.
”They have not disputed the fairness of our offer, nor have they rejected it,” Xstrata said.
WMC shares closed down 11 cents to AUS$7,54. – Sapa-AFP