China’s Minmetals Resources (MMR, 五礦資源) said yesterday it would withdraw a bid for Equinox Minerals of Australia after a Canadian firm topped its offer, ending Beijing’s latest move on Australia’s mining sector.
Canada’s Barrick Gold, the world’s biggest gold miner, said on Monday it had struck a deal to buy Equinox for C$7.3 billion (US$7.7 billion), well above the US$6.5 billion Minmetals offer earlier this month.
Minmetals’ bid for Equinox would have seen the biggest Chinese takeover of an Australian resources firm and could have created the 14th largest copper producer in the world.
“While we still consider the Equinox assets provide a good fit with MMR’s strategy, the price offered by Barrick is above our most optimistic assessment of value,” Minmetals chief executive Andrew Michelmore said.
“Competing with Barrick at these prices would, in our view, be value destructive for MMR’s shareholders,” he added in a statement to the Hong Kong stock exchange, where Minmetals is listed.
Minmetals, China’s largest metals trader, saw its shares plunge 7.88 percent to HK$5.26 (US$0.68) when it resumed trading yesterday afternoon after a suspension in the morning following news of Barrick’s offer.
Barrick offered C$8.15 per Equinox share in cash, which represents a 16 percent premium over the per-share offer for Equinox proposed by Minmetals on April 4.
According to Barrick, the Equinox board of directors has “unanimously approved entering into the support agreement” and recommends that Equinox shareholders accept the offer.
Equinox is listed in both Canada and Australia and has previously called the takeover bid by Minmetals “opportunistic” and “lowball.”
Minmetals’ initial bid was the latest move by a Chinese state-owned firm to get a foothold in Australia’s mining sector as the Asian powerhouse looks to tap the continent’s huge natural deposits to feed its ever-growing economy.
However, Beijing’s interest in its mining firms has sparked intense debate in Australia over whether to allow Chinese state-owned entities to increase their control over the country’s resources.
Minmetals is 75 percent owned by state-owned China Minmetals Corp (中國五礦公司).
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