Antofagasta, the Chilean copper miner, has launched a 527m Australian dollars (£213m) cash bid to take full control of its El Tesoro mine, derailing a rival offer from the Canadian company Quadra for a minority stake in the mine.
Antofagasta, which is listed in the UK, owns a 69 per cent stake in El Tesoro in northern Chile, with the remaining stake owned by Equatorial Mining. AMP, the Australian insurance company that owns Equatorial Mining, has agreed to sell its holding to Antofagasta in the absence of a higher offer. Quadra has not ruled out increasing its offer after saying it would "weigh its options carefully".
In a complex deal, Antofagasta has bought a 20 per cent stake in Equatorial Mining for about A$80m, or A$8 a share. AMP has agreed to sell a further stake of more than 57 per cent in the holding company to Antofagasta for $A11.20 a share, a 21 per cent premium to Quadra's offer. The remaining stake in the company represents an option granted to Quadra to purchase a 20 per cent holding, although the Australian company said it intends to terminate this option at the earliest opportunity.
The deal follows Xstrata's successful battle to win control of Falconbridge of Canada as mining companies look to take advantage of soaring metal prices and strong cash flows to consolidate assets. This deal will consolidate Antofagasta's ownership of assets in the Sierra Gorda region, where its Esperenza project is also located.
Citigroup said the deal could limit Antofagasta's ability to pay a special dividend but described the deal as "well priced and sensible".Reuse content