Equinox shareholders urged to reject Lundin acquisition
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Highlights
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MMG’s owner, Minmetals Resources Limited (HKSE: 1208), announced today that it intends to make an all cash offer to acquire Equinox Minerals Limited for approximately C$6.3 billion (the “Offer”).
Under the terms of the proposed Offer, MMR will acquire all of the outstanding common shares in Equinox (the “Equinox Shares”) not already owned by it for C$7.00 in cash per Equinox share. The C$7.00 per share offer represents a substantial premium of:
- 33% to the 20 trading day VWAP of Equinox Shares on the TSX to April 1, 2011; and
- 23% to the closing price of Equinox Shares on the TSX of C$5.71 on April 1, 2011, the last day prior to announcement.
- termination of the existing Equinox bid for Lundin without any Lundin shares being taken up;
- simple majority approval of MMR shareholders as required under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. MMR’s majority shareholder, China Minmetals Corporation, has indicated that it fully supports the acquisition and controls sufficient votes to pass the required resolution once NDRC approval to cast its votes is obtained;
- shares having been deposited (and not withdrawn) representing, together with the Equinox shares already owned by MMR, more than two-thirds of the outstanding Equinox shares on a fully-diluted basis. MMR has an existing 4.2% shareholding in Equinox;
- receipt of applicable regulatory approvals (including approval under the Australian Foreign Acquisitions and Takeovers Act) and other customary conditions for an offer of this nature; and
- Equinox’s shareholder rights plan being terminated, waived or determined to be ineffective.
MMR’s Chief Executive Officer, Andrew Michelmore, said: “Our Offer for Equinox aligns with MMR’s strategy for growth, enhancing our global production portfolio. For Equinox Shareholders, the offer is compelling in that it not only provides a substantial premium and certainty of value, but it also provides a superior alternative to the proposed acquisition by Equinox of Lundin.
“In order to take advantage of MMR’s forthcoming offer, Equinox shareholders should reject the Lundin acquisition at the shareholders’ meeting on April 11 and tender their shares into MMR’s offer.”
For MMR shareholders, the acquisition significantly expands and extends MMR’s production profile of its operations to beyond 2030, and more than doubles MMR’s exposure to the attractive fundamentals of the copper market.
The acquisition of Equinox marks MMR’s first investment into the African copper belt and the Middle East. Investment into both regions is consistent with MMR’s long term strategic growth plans.
Equinox’s Lumwana mine in Zambia is a substantial copper producing asset, with current production of 145,000 tonnes per annum and a stated mine life of 37 years. Equinox has indicated the potential ability to expand Lumwana to 260,000 tonnes per annum of copper within the next five years. In addition, Equinox’s Jabal Sayid project in Saudi Arabia, with a forecast average copper production of 60,000 tonnes per annum, is expected to commence production in 2012. MMR is confident that through the application of its own management and technical expertise that it can deliver and enhance Equinox’s current operations and stated expansion plans.
Funding
MMR’s consideration for the Offer is expected to be financed through a combination of existing cash reserves, long term credit facilities from Chinese banks and equity including financial investments in MMR by Chinese institutions.
The proposed offer is supported by MMR’s ultimate controlling shareholder, China Minmetals Corporation. Funding details will be set out in the offer and circular in respect of the Offer.
The President of China Minmetals Corporation, Mr. Zhou Zhongshu, commented: “As MMR’s largest shareholder, we are delighted to extend our support for the acquisition. We regard this transaction as an important next step in MMR’s transformation into a leading upstream base metals company.”
The Offer
Full details of the Offer will be set out in the offer and circular to be mailed to Equinox shareholders. MMR expects to formally commence the Offer and mail the offer and circular to Equinox shareholders within 3 weeks.
It is currently anticipated that all shareholders, including holders of Australian CHESS Depository Instruments, will be able to elect to receive the C$7.00 per share offer price in Australian dollars based on the exchange rate at or about the time of payment.
The Offer will be subject to certain conditions including, without limitation:
MMR expects the Offer to be completed by mid 2011.
Equinox Vote for Lundin Acquisition
Equinox has scheduled a shareholder’s meeting for April 11, 2011 to consider Equinox’s proposal to acquire Lundin. In order to take advantage of MMR’s forthcoming offer, Equinox shareholders should reject the Lundin acquisition at the shareholders’ meeting and tender their shares into the Offer.
Advisors and counsel
MMR’s financial advisors on the proposed Offer are Deutsche Bank (lead) and Macquarie Capital Advisers (joint). Davies Ward Phillips & Vineberg LLP is acting as Canadian legal counsel, Freehills as Australian legal counsel and Linklaters as Hong Kong legal counsel.
North America and Australia Media Call
MMR will host a media conference call for North American and Australian media at 18:30pm Toronto Time, Sunday April 3, 2011 / 08.30am Australian Eastern Standard Time (Monday April 4).
Hong Kong and Australia Investment Market Presentation
MMR will host an investor presentation at the Four Seasons Hotel in International Finance Centre, Central, Hong Kong on Monday, April 4, 2011 at 11:00am Hong Kong Time / 13:00pm Australian Eastern Standard Time. Simultaneous remote dial-in details for overseas participants are set out in Appendix A.
Hong Kong and Australia Press Conference
MMR will host a press conference for Hong Kong and Australian media at the Four Seasons Hotel in International Finance Centre, Central, Hong Kong on Monday, April 4, 2011 at 12:30pm Hong Kong Time / 14.30pm Australian Eastern Standard Time. Simultaneous remote dial-in details for overseas participants are set out in Appendix A.
North American / European Investment Market Call
MMR will host an analyst and investor conference call on Monday, April 4, 2011 at 10:00am Canadian / US Eastern Standard Time / 15:00pm London Time.
For dial in details on all of the above calls and the location of the presentations, please see Appendix A to this announcement.
Contacts
Investors and analysts
Minmetals Resources Limited
Martin McFarlane
Head of Investor Relations
Phone: +1 778 987 1800
Email: martin.mcfarlane@mmg.com
Media – Australia
Kreab Gavin Anderson
Nick Maher / Miche Paterson
Phone: +61 3 9659 3000
Email: nmaher@kreabgavinanderson.com / mpaterson@kreabgavinanderson.com
Media – Hong Kong and Beijing
Kreab Gavin Anderson
Phone : +852 2523 7189
Richard Barton / Grace Zhang
Phone: +852 9308 1056 / +852 6746 8971
Email: rbarton@kreabgavinanderson.com / gzhang@kreabgavinanderson.com
Media – North America
Hill & Knowlton Canada
Lindsay Mack
Phone: +1 416 413 4771
Mobile: +1 416 526 5388
Email: lindsay.mack@hillandknowlton.
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