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First Quantum Minerals Ltd. has started the countdown on its $5.1-billion hostile takeover offer for Canadian rival Inmet Mining Corp., taking the bid to create a “top five” copper producer directly to shareholders.
The $72-a-share offer was sweetened twice after Inmet, the owner of the massive Cobre Panama copper project, rebuffed friendly approaches by First Quantum at $62.50 in October and $70 in November.
“The clock starts ticking now, today,” First Quantum president Clive Newall said Wednesday, three weeks after announcing the company’s intention to go hostile.
First Quantum wants to get its hands on Cobre Panama, the $6.2-billion project Inmet is building in Central America, which will be the biggest mine in the region’s history.
The bid is a bet that demand for copper has even further room to grow after a decade of ravenous consumption by No. 1 consumer China that pushed prices to record highs last year of more than $4.50 (U.S.) a pound. On Wednesday, copper was trading at about $3.67 a pound.
Inmet has not commented on the current bid but it has rejected earlier offers from First Quantum as inadequate and highly conditional and the company appears determined to secure a higher bid than First Quantum’s or develop the project on its own.
The Cobre Panama project is well known to the global copper community, meaning First Quantum may have to face down rival bids to consummate a takeover. At least a dozen companies have visited the site over the past three years as Inmet tried to attract a joint venture partner, experts say, although the field will likely have been thinned after some major companies pulled back from the market in the global financial crisis.
Africa-focused First Quantum had signalled in earlier approaches the possibility of a higher offer if Inmet management were willing to give it access to confidential company data, but Mr. Newall said that is now off the table.
“Our offer is our offer,” he said.
First Quantum, a company known for its adept in-house engineering squad, thinks it can build Cobre Panama cheaper and quicker than Inmet, which has already contracted out much of the work on the mine.
It did not go into details in its circular about how it would do that, but it did criticize Inmet’s financing plans.
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