IRON ore developer Murchison Metals has boosted its stake in rival Midwest amid speculation it is poised to announce a fresh takeover offer, challenging a recommended bid from China's Sinosteel.
Both Murchison (ASX: MMX: quote) and Midwest (ASX: MIS: quote) were placed into trading halts before the market opened today, with Murchison citing an upcoming announcement of a "proposed significant transaction".
A substantial shareholder notice released to the Australian Securities Exchange then revealed Murchison had boosted its stake in Midwest to 9.98 per cent from 4.78 per cent with Murchison paying $6.38 per share for the new shares last week.
That $6.38 is in line with the price being offered by Sinosteel in its $1.36 billion all-cash offer for Midwest, which has been recommended by the miner's board.
Murchison launched a failed bid for Midwest last year pitched at one new Murchison share for every 1.08 Midwest shares held, which valued Midwest at A$986 million at the time.
Murchison abandoned its offer after Sinosteel appeared on the scene and after a decline in its share price lowered the value of its all share bid.
But Perth-based Murchison has continued to point out the synergies that could be generated by bringing together the two companies and their neighbouring iron ore developments in the mid-west region of Western Australia.
There is speculation among market participants that Murchison will unveil a fresh offer today, with talk that the bid will again be an all-share offer, and some suggesting an agreed merger between the two.
Murchison Metals was not immediately available for comment and a spokesman for Midwest declined to comment.
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