latest copper m&a jinchuan vs vale for metorex

Vale May Raise Metorex Bid After Jinchuan?s $1.36 Billion Offer for Miner

By Jesse Riseborough and Juan Pablo Spinetto - Jul 6, 2011 4:36 AM GMT+1000

Vale SA (VALE3), the world?s largest iron-ore producer, may raise its bid for Metorex Ltd. (MTX) after Jinchuan Group Co. offered $1.36 billion to acquire the African copper company, analysts said.

Jinchuan, the biggest Chinese nickel producer, offered 8.90 rand ($1.32) yesterday for each share of Johannesburg-based Metorex, 21 percent more than Vale?s bid of 7.35 rand a share on April 8. Vale, based in Rio de Janeiro, has until July 15 to match or beat Jinchuan?s offer, Metorex said today.

Vale may decide to increase its bid for Metorex because the price is small compared with the Brazilian company?s market value and cash generation, said Leonardo Brito, an equity analyst in Rio for hedge fund Teorica Investimentos.

Metorex, which controls almost 5 million tons of copper resources in Africa, surged to the highest in more than 2 1/2 years in Johannesburg trading. The company gained 8 percent to 8.68 rand by the 5 p.m. close, the highest since October 2008. Metorex issued a cautionary statement on March 28 detailing talks that might affect its share price.

?There?s room for Vale to come back with a better price, but that would depend on how bullish they are on the outlook for copper,? said Stephen Meintjes, head of research at Imara SP Reid in Johannesburg. ?Jinchuan must have a very clear idea of where copper prices are heading.?

Vale won?t engage in a ?bidding war,? Chief Financial Officer Guilherme Cavalcanti said in an interview before the announcement.

No ?Bidding War?
?We have our limit on price and we will not go to a bidding war,? Cavalcanti said on Bloomberg Television?s ?The Pulse with Maryam Nemazee? in London.

Jinchuan?s offer values Metorex at 9.1 billion rand, the companies said today. Vale has a market value of about 265.6 billion reais ($169.6 billion).

Copper rose to a 10-week high yesterday on speculation that cooling growth will allow monetary tightening to slow in China, the world?s largest metals buyer. Copper futures for September delivery gained 4.5 cents, or 1 percent, to close at $4.3475 a pound at 1:17 p.m. on the Comex in New York. Earlier, the price touched $4.354, the highest since April 27.

Vale lost 51 centavos, or 1.1 percent, to 46.54 reais in Sao Paulo trading at 3:32 p.m. local time. The stock has lost about 3.5 percent this year, compared with a 9.9 percent decline for the benchmark Bovespa Index.

?Irrevocable Undertakings?
?Metorex has not yet approved, recommended or entered into any agreement in relation to the Jinchuan offer,? it said. Jinchuan has received ?irrevocable undertakings? from holders representing 8 percent of the stock, Metorex said.

Goldman Sachs Group Inc. is advising Jinchuan and Standard Bank Group Ltd. and One Capital Advisory are advising Metorex. Jinchuan said its cash offer is backed by a South African registered bank guarantee.

Metorex controls the Ruashi open-pit mine in the Democratic Republic of Congo and the Chibuluma copper development in Zambia.

It has an estimated 4.74 million tons of copper resources, including 1.8 million tons at the Lubembe project in Congo, the company said in April.

?Jinchuan has had a long-standing off-take relationship with Metorex and we know them to be an impressive operator,? Jinchuan Chairman Yang Zhiqiang said today in an e-mailed statement. The company wants ?to further strengthen our current operations in the Republic of Zambia and the Democratic Republic of Congo as we continue to build our African base metals business,? he said.

Jinchuan?s Acquisitions
Jinchuan last year bought Vancouver-based Continental Minerals Corp. for C$432 million ($449 million) and Toronto- based nickel producer Crowflight Minerals Inc. for $140 million.

The company, based in China?s Gansu province, acquired 45 percent of Wesizwe (WEZ) Platinum Ltd., a Johannesburg-based platinum explorer listed on the city?s stock exchange, with the China- Africa Development Fund this year. Metorex represents ?a unique combination of copper and cobalt assets,? Yang said in the statement.

http://www.bloomberg.com/news/2011-07-05/metorex-gets-firm-intention-from-china-s-jinchuan-to-make-offer-for-group.html