Takeover talk as Sinosteel lifts stake in Murchison
March 4, 2009 - 2:48PM
Sinosteel Corp has fuelled speculation it may seek to takeover Murchison Metals after the Chinese steel making giant lifted its stake in the iron ore miner.
The state-owned enterprise's Sinosteel Ocean Capital arm on Tuesday become a substantial shareholder in Murchison, lifting its stake to 5.85% from 4.5% previously.
The news sent Murchison shares 5.5 cents, or 9.7%, higher to 62.5 cents in afternoon trade.
The steel maker had crept up Murchison's register after buying a 2.4% slice in the company in late April.
Sinosteel acquired Murchison's neighbour in Western Australia's mid-west region, iron ore miner Midwest Corp, for $1.36 billion in July - the first successful hostile takeover by a Chinese entity of a foreign company.
Federal Treasurer Wayne Swan took the unprecedented move in September of limiting Sinosteel to a maximum 49.9% stake in Murchison.
Sinosteel had previously sought to acquire up to 100% of Murchison but later withdrew that application.
A Foreign Investment Review Board spokesman said he would not comment broadly or specifically on the matter.
"It is clear that Sinosteel sees Murchison as a sound investment considering its status as a major strategic player in the mid-west region,'' Murchison executive chairman Paul Kopetjka said in a statement on Wednesday.
If Sinosteel seeks to broaden its mid-west landholdings with a full-blown play for Murchison, it will gain a 50% interest in Oakajee Port and Rail (OPR).
OPR is a joint venture between Murchison and Japanese trading giant Mitsubishi that is finalising an agreement with the WA government for the construction of new port and rail infrastructure in the mid-west of the state.
MMX Price at posting:
62.5¢ Sentiment: LT Buy Disclosure: Held
