First Quantum Moves Closer to Acquiring Inmet

Wednesday, March 13 2013 @ 01:18 pm EDT

Contributed by: Don Winner

by Deyana Ivanova - Vancouver-based copper miner First Quantum Minerals Ltd has moved closer to taking control of Inmet Mining Corp after most shareholders of the Toronto-based company tendered shares in favour of First Quantum's C$5.1 billion (£3.23 billion) hostile takeover bid designed to create one of the world’s largest copper producers.

First Quantum said in a statement issued on March 12 that a total of 43.2 million Inmet shares, representing about 61.45 percent of the company’s outstanding shares, had been tendered in favour of the cash-and-stock bid. Aiming to go forward with the deal, First Quantum said it extended its takeover bid by 10 days to 23:59 EDT on March 21 and lowered the level of minimum support required. It said it will now proceed with the transaction if more than 50 percent of Inmet’s outstanding shares are tendered in favour by March 21, instead of the initial target of more than two-thirds.

Moving Closer to Gaining Control of Cobre Panama - “We are delighted with the overwhelming support that Inmet shareholders have shown for our offer,” First Quantum’s Chief Executive Philip Pascall said, as quoted by The Financial Times. “It is our expectation that we will be in a position to complete the offer and begin taking up and paying for shares shortly following the expiry of the offer on March 21.”

The strong endorsement from Inmet’s shareholders and the lowering of the required minimum number of Inmet shares tendered to the offer takes First Quantum a step closer to acquiring its fellow company and gaining control of the Cobre Panama project. The $6.2 billion (£4.1 billion) project in the Central American country is First Quantum’s main goal and a driver for its acquisition efforts. The trophy mine is said to be one of the largest undeveloped copper resources in the word, expected to produce 300,000 tonnes of copper a year. Cobre Panama, plus Inmet’s other mining projects in Zambia, Peru and Finland, could put First Quantum’s annual copper production at over one million tonnes, making it one of the world’s largest pure-play copper miners.

First Quantum Extends Inmet Takeover Bid to March 21 - First Quantum Offer First Quantum’s takeover bid for Inmet is worth roughly C$5.1 billion, or C$72 a share, representing a 36 percent premium to Inmet’s closing share price on November 27, the day before the company announced that it had rejected two earlier, unsolicited offers from First Quantum. Having grown impatient after Inmet’s board denied its previous acquisition bids, First Quantum took its acquisition offer for Inmet to shareholders (First Quantum Launches Hostile Bid For Inmet). In response to this hostile takeover attempt, Inmet sent a letter to its stakeholders earlier this month urging them to reject the offer as too low, especially after taking into account a decline in the value of First Quantum’s shares amid a volatile copper market.

Copper prices currently hover near $3.50 a pound, compared to $3.80 a pound when First Quantum first approached Inmet with its acquisition proposal. Inmet shares, which closed at C$68.63 on the Toronto Stock Exchange on March 11, rose to trade closer to the First Quantum offer price the following day. They closed C$1.35 higher at $69.98 on March 12, while the First Quantum share price was up five Canadian cents at C$20.69.

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