jindal to continue bid

Rocklands shares slump as Jindal Steel sells down its stake

* Michael Bennet
* From: The Australian
* January 08, 2010 12:00AM

SHARES in Rocklands Richfield slumped more than 15 per cent yesterday after India's Jindal Steel & Power "bewildered" the market by selling down its stake in the takeover target days after matching China-based Meijin Energy Group's increased $197 million bid for the coalminer.

Rocklands shares closed down 7c at 37.5c after the Perth-based miner revealed Jindal had cut its stake to 13.6 per cent on Tuesday after earlier buying up a 16.37 per cent holding.

Jindal senior general manager Jasbir Singh said the sale was designed to reduce its holding below 15 per cent -- the federal government's preferred level of foreign ownership in resources.

"It's just a normal small sale because we were very close to the Foreign Investment Review Board approval limit of 15 per cent," he said.

The 13.6 per cent holding would provide "some cushion".

The sale surprised Rocklands chief executive John Girdlestone, who said he did not understand the share sell-off.

"I obviously need to talk to Jindal about it because I'm completely bewildered by it," Mr Girdlestone said.

"On December 30, they wrote to us and matched the offer that we had received from Meijin at 56c a share, then on January 4-5 they're selling again. I really just don't understand it."

Analysts were also taken aback, with Patersons' Andrew Harrington describing the share sale as "strange".

"I thought it was bizarre," Mr Harrington said.

"They're going dollar for dollar in a takeover, competing with the Chinese group, Meijin, and then they go and sell?

"Seems very, very strange strategically to do that."

Mr Singh downplayed the sale, saying Jindal would continue its bid for Rocklands and would meet the board next week.

"Some terms are still being negotiated, based on our revised conditional bid," Mr Singh said.

Jindal paid about $12m for major shareholder Benny Wu's 9.9 per cent of Rocklands in September last year through an agreement with the board to acquire the miner at 42c a share.

Meijin entered the fray in early November before the battle heated up on Monday when Rocklands revealed Jindal had matched Meijin's increased offer of 56c a share and 6c for each 50c option.

Rocklands has a suite of coal tenements in Queensland that the miner estimates hold more than 900 million tonnes of coal.