澳洲两家铁矿生产商提议合并, 中钢的收购可能要失败

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Murchison, Midwest Propose Deal,
Challenging Offer from Sinosteel
By ALEX WILSON
May 26, 2008 7:24 a.m.

MELBOURNE -- Rival iron ore developers Murchison Metals Ltd. and Midwest Corp. Ltd. Monday announced a proposed link-up that would ultimately see Murchison take control of the combined entity via a reverse takeover that trumps an earlier recommended 1.36 billion-Australian-dollar (US$1.31 billion) bid for Midwest from China's Sinosteel.

Under the complex proposal that values Midwest at A$1.53 billion, 0.575 Midwest shares will be exchanged for each Murchison share. This values each Midwest share at 1.74 Murchison shares, or A$7.17 each based on the average price of Murchison shares over five days.

Murchison and Midwest have adjacent iron-ore projects in the Midwest iron ore region of Western Australia and the pair said bringing the two together would deliver significant synergies, without putting a dollar value on these.

The proposed merger, which requires shareholder approval, would be carried out through a reverse takeover that would see Murchison shareholders offered Midwest shares, but with Murchison holders ending up with 52.2% of the merged entity and Midwest with 47.8%.

Midwest's board recommends Murchison's merger deal, on an initial assessment, which it said offers a premium to Sinosteel's offer. Midwest said the proposal represents a 14.9% premium to Midwest's share price over the past five days and a 12.4% premium to Sinosteel's all-cash offer of A$6.38 a share.

However, in an unusual move, Midwest is also maintaining its recommendation of the Sinosteel offer. "We are recommending (the merger) as a proposal that has, on the face of it, value for shareholders but what we are not doing is changing our recommendation on the Sino cash bid - the two are existing in parallel," Midwest Chief Executive Bryan Oliver said.

Mr. Oliver said Midwest won't alter its recommendation of the Sinosteel bid until all the implications of the merger proposal have been fully assessed, particularly the market reaction to the announcement, and in the meantime shareholders have the flexibility to accept the Sinosteel offer, sell on market or support the merger.

Murchison said the reverse takeover structure is designed to help the deal avoid the prospect of Sinosteel blocking the deal with its 19.9% interest in Midwest, as the scheme of arrangement to approve the deal will require only 50% shareholder approval.

"We believe this offer will be very well supported in the market and that shareholders in both companies will win out of the result," Murchison Executive Chairman Paul Kopejtka said.

News of the deal saw Murchison shares surge 9.7% to A$4.43 while Midwest jumped 12% to A$7.00 in an Australian market that ended down 1.1%.

Murchison has sweetened its offer significantly from a failed bid it launched last year, which was pitched at one new Murchison share for every 1.08 Midwest shares held. That offer would have delivered Midwest 32% of the combined entity, while the latest proposal offers it 47.8%.   

The linkup is a challenge to Sinosteel, which has made an aggressive push into the Midwest region as it moves to secure iron ore offtake for its steel mills. Some analysts said the Chinese group is unlikely to walk away and could launch a higher bid for Midwest or wait for the merger to proceed and bid for the combined entity.

A spokesperson for Sinosteel said: "Sinosteel has 19.89% of the shares in Midwest Corporation, making it Midwest's largest shareholder, and will review today's announcement (from Murchison and Midwest) carefully before determining its response." The spokesperson added, "Sinosteel is also of the view that its offer...provides the certainty of cash in a challenging environment."

Regarding the possibility of Sinosteel increasing its offer, a person familiar with its bid said: "Sinosteel, which had secured a bank loan to fund its offer for Midwest, has yet to decide what its response will be. Declaring its current offer to be final or letting its current offer expire, are also possible courses of action."

Despite the analysts' views, this person also said a bid by Sinosteel for the merged Midwest-Murchison entity would be unlikely due to concerns the Chinese steelmaker has over Chameleon Mining NL's continuing case against Murchison for rights to some of its iron ore projects. Murchison has said the claims are unfounded.

"Sinosteel is unlikely to want to bid for a merged Murchison-Midwest entity. Sinosteel is very concerned about the Chameleon litigation, which could potentially be very destructive to Murchison's value, and is also concerned about Murchison's potential mining costs and resource position," the person said.

Murchison's Mr. Kopejtka said the higher offer had been in part prompted by Midwest's recommendation of the Sinosteel offer and on a growing appreciation of the synergies of bringing the two companies together.

Under the merger proposal, Kopejtka would be chairman of the combined group while Murchison Chief Executive Trevor Matthews would be managing director.