O'Reilly poised to net £56m from takeover of zinc miner ARCON

Sir Anthony O'Reilly, the chief executive of Independent News & Media, the owner of The Independent, will receive €80m (£56m) in cash and shares from a proposed takeover of a mining company in which he is the principal shareholder.

Lundin Mining of Canada has agreed to buy ARCON International, a Dublin-listed zinc miner in which Sir Anthony has a 65 per cent holding.

Under the deal he will get €40m in cash and a 9 per cent stake in the combined company, which a spokeswoman for ARCON said would be worth a further €40m.

Sir Anthony has indicated that he will accept the deal, which requires approval from shareholders representing 80 per cent of the company. The deal price of €93.6m represents a tenfold increase from its value of €8.6m after the company went throug`h a restructuring in 2002.

Although the offer is below ARCON's closing share price the day before the announcement on Thursday, the company said it represented a 30 per cent premium on the share prices three months ago.

ARCON's main asset is the Galmoy mine in Co Kilkenny in Ireland, which produces zinc and lead. Lundin owns a mine in Sweden that has produced zinc, lead and silver since 1857.

ARCON said the improved cash flows of the combined group would make it possible to develop further the Galmoy mine by investing in operations, production and also exploration.

Peter Kidney, the chief executive of ARCON, said: "The timing of this potential transaction captures the recent strength in both zinc and lead commodity prices and enhances investor exposure to them."

It is the fourth major deal that Lundin has undertaken in six months. Sir Anthony will become the combined company's second-largest shareholder. The combined company will have an annual production of more than 150,000 tonnes of zinc and 46,000 tonnes of lead, as well as copper and silver.