Hard to see why money came in late today on MMX, but a reason exists.
Some late info.
Midwest Disclosure Spurs Talk of Bid From Sinosteel By ALEX WILSON December 7, 2007
MELBOURNE, Australia -- Iron-ore developer Midwest Corp. said Thursday it was in talks about a possible transaction, sparking talk that Sinosteel Corp. of China may be preparing to launch an all-cash offer to counter an existing bid by Murchison Metals Ltd. of Australia.
Perth-based Midwest said it was in discussions with parties interested in pursuing corporate transactions. There is market speculation that state-owned Sinosteel is planning a offer valuing the target at 1.28 billion Australian dollars (US$1.11 billion), based on an offer of A$6 a share.
Sinosteel has a nonbinding agreement with Midwest that could see it earn a 50% stake in the Australian company's iron-ore projects in the midwestern region of the state of Western Australia.
A Sinosteel official declined to comment on speculation that it was planning a Midwest bid but said the company was very closely watching Murchison's offer.
Midwest's board has rejected the bid from rival iron-ore developer Murchison, which is offering one new Murchison share for every 1.08 Midwest shares held.
Murchison has a joint-venture agreement with Japan-based Mitsubishi Corp. and plans to include Midwest's assets in this joint venture if its bid is successful.
Separately, Sinosteel said Thursday that it was making preparations for an initial public offering, a move that could give it a war chest to chase acquisitions. The IPO plan still needs approval from the securities regulator, a Sinosteel official said.
Iron-ore prices have risen five years in a row, and many analysts are expecting a further rise of at least 30% in the current round of annual negotiations between miners and steelmakers. Those price increases and surging demand, driven by Chinese steel production, have sparked a rush of interest in any new sources of ore.
Midwest's rejection of Murchison's offer was based in part on its belief that its iron-ore resources were worth more than Murchison's.
Midwest's shares surged 13% to A$4.75 Thursday, lifting the company's market capitalization to A$1 billion. Murchison's stock fell 4.5% to A$3.80, valuing its bid for Midwest at A$3.52 a share, or A$748 million.
--Juan Chen in Beijing contributed to this article.
MMX Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
