LONDON Global copper miner First Quantum Minerals Ltd. says it plans to make an unsolicited Canadian $5.1-billion ($5.2-billion) offer for Toronto-based copper and zinc miner Inmet Mining Corp.
This represents an increase from its previously rejected offer of $4.89 billion.
According to First Quantum, the combined entity could potentially be one of the worlds five largest copper producers.
"First Quantums demonstrated project execution, reflecting its in-house engineering, project management and construction expertise, gives it the confidence that it can bring significant benefits to Inmets major project, Cobre Panama," the company said.
Under the terms of the offer, Inmet shareholders would receive a consideration of C$72 ($72.96) per Inmet share, and could to elect to receive First Quantum shares, cash or a combination thereof, subject to an overall consideration mix of about 50 percent shares and 50 percent cash, First Quantum said.
The offer represents a premium of 65 percent to Inmets underlying net cash-adjusted equity value as of Nov. 23, according to First Quantum. The offer also represents a premium of 35 percent to Inmets 30-day volume-weighted average price and 33 percent to its closing share price as of Nov. 23, the company said.
"We believe strongly in the prospects of a combination for our two companies, which are uniquely complementary," Philip Pascall, chief executive officer and chairman of First Quantum, said in a statement.
A combination of First Quantum and Inmet would create a copper company with the potential to produce more than 1.3 million tonnes per year of the red metal by 2018, according to the company.
Inmets management said in a statement Monday that it had not yet taken a position on the announced offer.
"The offer has not yet been received by Inmet, and Inmet shareholders are advised to take no action at this time. The board of directors of Inmet, in accordance with its fiduciary duties and with counsel from its financial and legal advisers, will fulfill its legal responsibility and will evaluate any formal offer and will recommend a course of action that is in the best interests of Inmet and its stakeholders. Until such time as we make a public announcement, we will refrain from providing any statements or interviews to media outlets," it said.
In late November, Inmet rejected an earlier hostile takeover bid by First Quantum (amm.com, Nov. 29).
Full details of the proposed deal will be laid out in the formal offer and takeover bid circular, which is expected to be sent to Inmet shareholders in early January, then filed with Canadian securities regulators.
The offer will be subject to certain conditions, including confirmation that the recently adopted Inmet shareholder-rights plan will not negatively affect the potential deal.
The offer must also be accepted by Inmet shareholders owning at least 66 percent of the outstanding shares on a fully diluted basis, as well as receipt of regulatory approvals.
A version of this article was first published by AMM sister publication Metal Bulletin.