murchison to up its bid

Story below in today's Australian...MMX are keen, I wonder if they're expecting another bidder?

http://www.theaustralian.news.com.au/story/0,25197,22584766-5005200,00.html

MURCHISON Metals is expected to ditch its two-tier takeover strategy for rival iron ore hopeful Midwest as early as today and adopt the higher of the two scrip-based offers.

Murchison, which launched a $1billion all-scrip bid for Midwest last Wednesday, will try to curry favour with investors through an offer of one Murchison share for every 1.08 Midwest shares held, and dismiss the one-for-1.16 bid that was dependent on tax considerations.

The one-for-1.16 structure, called the Base Price offer, depended on Murchison being satisfied that Midwest would not incur a material tax change should it sell a 50 per cent stake in its Weld Range project to Chinese partner Sinosteel.

It is unclear whether Murchison now believes that the tax liability will not apply, but the revised hostile takeover offer is probably intended to give Midwest investors greater certainty in what market watchers are expecting to be a long and complicated takeover play. If Murchison proceeds with the simplified bid structure, it would mark the first real change since the offer was launched. Market watchers expect that Murchison will have to add a cash sweetener at some stage.

The Midwest board has been largely silent since Wednesday as it bunkers down to consider the offer. Murchison is only targeting a 50.1 per cent acceptance level in a move largely designed to circumvent the shares under control, or influenced by, Malaysian investor and Midwest board member Dato David Law Tien Seng, who is believed to have knocked back previous unannounced merger proposals by Murchison as inadequate.

Meanwhile, Murchison chief executive Trevor Matthews told ABC Television yesterday that his company wanted to play a big part in the expected consolidation of the second-tier iron ore sector.

Murchison and Midwest are working to prove up hematite reserves at twin projects at Weld Range and Jack Hills in the West Australian midwest, which are crucial to the development of regional infrastructure that would also service others in the growing minerals province.

Mr Matthews said Murchison was always going to bid for Midwest and Wednesday's announcement should not be seen as a sign that the two needed to get together to resolve the current infrastructure impasse in the region.

"I think the Midwest bid is a first step in a process of consolidation and our plans in the future would be to look at what other opportunities there are in the iron ore industry to further expand our production," Mr Matthews said.

"Some companies will struggle to get their projects to development and I think with rising cost pressures across the industry consolidation makes sense for economies of scale and sharing capital costs over much larger resource bases.

"The main reason for the bid is basically the consolidation benefits we see from merging Midwest and Murchison at the iron-ore project level."