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Inmet Mining Corp. has a week to respond officially to a hostile takeover bid from rival First Quantum Minerals Ltd., but few expect anything short of a rejection of the $5.1-billion offer.
The owner of the coveted Cobre Panama copper project in Central America has until Jan. 24 to respond, and people familiar with the situation say it will come out swinging, recommending against the takeover and signalling progress in its search for an alternative palatable to shareholders.
Central to its defence will be a critical analysis of First Quantum’s track record on cost controls, meeting production targets and building mines in Latin America, said a source.
The company will allege First Quantum has a history of underestimating capital costs, as well as argue the Vancouver-based firm has no experience with capital projects the size of Cobre Panama, which will cost $6.2-billion to put into production.
How this plays out could prove critical to Inmet’s defence because the First Quantum bid of $72 a share is in cash and stock, which means the hostile suitor must convince investors of the value of its own shares.