new twist in battle for midwest

Whre iron ore is available - it's bound to attarct
"Indiana Jones and the kingdom of Iron skull" !
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New twist in battle for Midwest

May 26, 2008 - 11:42AM
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Iron ore miner Murchison Metals has agreed to buy fellow prospector Midwest Corp, beating out China's Sinosteel, The Australian Financial Review said on its website today.

Earlier on Monday, trading in the shares of the two companies was halted pending announcements, but no details were given. A Midwest spokesman declined to comment on the report. Murchison officials were not immediately available for comment.

Murchison made an unsolicited offer earlier this year for Midwest, which Midwest rejected. Midwest subsequently recommended a revised around $1.4 billion offer from Sinosteel.

Murchison has increased its voting stake in Midwest to 9.98% from 4.78%, according to a shareholder notice filed with the Australian Stock Exchange on Monday.

A new Murchison offer could trump Sinosteel, which controls 20% of Midwest. A 10% stake in Midwest is enough to block Sinosteel from compulsory acquisition of all of Midwest.

China, the world's largest steel producing country, is seeking stakes in iron ore start-ups to break its dependence on ore from heavyweights Rio Tinto and BHP Billiton.

Sinosteel, China's largest ferrous metals trader, also wants to buy a stake in Australian iron ore miner Fortescue Metals Group, the newspaper said on Monday, as Beijing seeks to wield more control over raw material supplies.

Murchison has a partnership with Japan's Mitsubishi and, like Midwest, plans to build railways and a port from scratch to tap the vast reserves of iron ore in the mid-west region of Western Australia.

The AFR's website said Mitsubishi would be involved in Murchison's buy of Midwest. It did not cite sources.

Analysts had said a tie-up between Midwest and Murchison was logical and both would benefit from shared rail and port operations.

On May 2, Murchison told the Australian stock exchange it was not in talks with Sinosteel on a possible takeover, after the exchange queried sharp moves in Murchison's share price. Sinosteel has a 2.4% stake in Murchison.

Murchison shares last traded at $4.04, while Midwest ended Friday at $6.25.