WMC claims hostile Xstrata bid is 30 per cent too low

The London-listed Xstrata's A$7.4bn (£3.0bn) hostile bid for the Australian mining company WMC came under fresh pressure yesterday after an independent audit, commissioned by WMC, valued its shares at about 30 per cent more than Xstrata is offering.

A war of words has erupted between the companies after Xstrata offered A$6.35 a share for WMC in October. WMC, which mines copper, is the world's fifth-largest nickel producer and owner of more than one-third of the world's uranium reserves.

WMC's defence document, released yesterday, said that the independent auditors Grant Samuel considered the offer was "neither fair nor reasonable ... shareholders are better off not accepting the offer". The statement concluded: "[Grant Samuel] supports the view we have maintained throughout - Xstrata's offer is materially inadequate." Grant Samuel said WMC was worth between A$7.17 and A$8.24 per share.

The WMC rebuff prompted an immediate response from Xstrata. Marc Gonsalves, the head of corporate affairs, said: "As you would expect with these statements, the headlines look exciting. However, the credibility of WMC directors' defence is critically dependent upon assumptions regarding exchange rates, commodity prices, discount rates and production levels ... Xstrata is sceptical of their conclusion."

Many investors expectan increased offer or counter bid as WMC shares remained substantially higher than the sum offered by Xstrata. WMC shares closed at A$7.32 in Sydney yesterday.

Meanwhile industry sources voiced doubts about another bidder emerging, pointing out that several mining companies were selling off assets - evidence that they may believe the commodities cycle is nearing its peak.

In what is becoming an increasingly acrimonious battle, WMC has been accused of actively seeking to defeat the bid by contravening the conditions set by Xstrata in their offer, including returning potentially large sums of cash to investors. There has also been talk of Australian government intervention, given the geopolitically sensitive nature of uranium mining.

But the Grant Samuel report was not all good news for WMC. An extra A$1bn may be required - in addition to a previous estimate of A$4bn - to properly develop its Olympic Dam site in South Australia, which contains 38 per cent of known global uranium reserves.

John Meyer, at Numis Securities, said Xstrata was unlikely to substantially increase its offer. "If Xstrata were to increase its offer I would expect it to be a nominal amount, but they will be reluctant to walk away," he said.

Start your day with The Independent, sign up for daily news emails
A poster by Durham Constabulary
Arts and Entertainment
books New York Times slammed over summer reading list
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine