|Chinese Steel Company Bids for Midwest|
Thursday March 13, 11:48 pm ET
Sinosteel Bids for Midwest in First Chinese Hostile Takeover Bid in Australia
SYDNEY, Australia (AP) -- China's state-backed Sinosteel Corp. launched a $1.1 billion takeover bid Friday for iron ore miner Midwest Corp. Ltd. in the first hostile approach by a Chinese company for an Australian one.
Sinosteel, China's No. 2 iron ore importer, said it is offering 1.2 billion Australian dollars, or 5.60 for each Midwest share, a 35 percent premium to Midwest's closing price Thursday. Midwest shares surged more than 30 percent Friday to as high as 5.48 Australian dollars.
"It's time Midwest shareholders had the opportunity to decide for themselves the value of their investment in Midwest," Sinosteel President Tianwen Huang said in a statement.
The hostile bid and the strong language used by the Sinosteel boss illustrate how keen China is to get a foothold in Australia's resource sector as demand and prices for raw materials surge.
Sinosteel already holds a 19.9 percent interest in Midwest, which is planning a 15 million metric ton (16.5 million U.S. tons) per year iron ore project in Western Australia state to shore up its iron ore supply.
Sinosteel's offer has Foreign Investment Review Board approval, giving it a green light from the federal government.
Midwest advised its shareholders to take no action on the offer until the company has had time to consider the bid, and reminded shareholders it rejected as too low an earlier informal bid made by Sinosteel in December at the same share price.