Chinese steelmaker Baosteel Group Corp. and Australian freight as well as infrastructure solutions provider Aurizon Holdings Ltd. (AZJ.AX) plan to make a joint A$1.14 billion or $1.06 billion takeover bid for Australian iron-ore and coal miner Aquila Resources Ltd. (AQA.AX), the two companies said Sunday.
Under the deal that values Aquila at about A$1.42 billion, the two companies will acquire Aquila as well as its 50 percent stake in the A$7.4 billion West Pilbara Iron Ore project. Shares of Aquila Resources are gaining more than 37 percent in Monday's regular trading session.
Aurizon and Baosteel Resources International Co. Ltd intend to acquire the entire shares of Aquila at A$3.40 per share in an off-market takeover bid. The offer price represents a 38.8 percent premium to Aquila's closing price of A$2.45 per share on Friday. Baosteel currently hold a 19.8 stake in Aquila.
The bid is subject to Baosteel and Aurizon gaining a minimum acceptance of 50 percent of Aquila's shareholders, in addition to approval by Australia's Foreign Investment Review Board.
On successful completion of the acquisition of the entire shares of Aquila, Aurizon will hold up to a 15 percent stake in the company, while Baosteel will acquire the remainder of the acceptances under the offer. Aurizon will own 10 percent of the shares, if the bidders gain between 50 percent and 90 percent of Aquila shares.
Since 2010, Aurizon has been focusing on growing its business in iron ore, Australia's largest export commodity. The company has stated its intention to develop multi-user, integrated rail and port infrastructure to service mid-tier and junior miners in the Pilbara that currently have stranded deposits and limited infrastructure solutions.
Aurizon's objective is to achieve majority ownership, development and operation of multi-user port & rail infrastructure underpinning the development of the West Pilbara Iron Ore Project or WPIOP. Baosteel is partnering with Aurizon for Aurizon's expertise in Australian bulk haulage solutions to deliver the rail and port component of the overall project.
The WPIOP is one of Australia's most substantial greenfield iron ore projects with over 2.2 billion tonnes of total resource. The proposed infrastructure development project currently envisages the construction of a 432 kilometer greenfield heavy haul rail line from Aquila Resources' joint venture mines to a new deep-water port to be constructed at Anketell Point on Western Australia's Pilbara coast, near Dampier.
The new mine, rail and port system is currently planned to have an initial capacity of 40 million tonnes per annum of direct shipping iron ore.
Lance Hockridge, Managing Director & CEO of Aurizon, said, "This proposal represents an unprecedented opportunity to co-develop world-class rail and port infrastructure in Australia, utilizing Chinese and Australian capital, to deliver much needed Australian commodities to China."
In a separate statement, Aquila Resources said it will form an independent board sub-committee to evaluate the proposal and will inform shareholders in due course. The company urged its shareholders not to take any action in relation to the takeover bid at this point of time.
In Monday's trading on the Australian Securities Exchange, AQA.AX is trading at A$3.36, up A$0.91 or 37.14 percent on a volume of 4.24 million shares.
AZJ.AX is trading at A$4.98, down A$0.19 or 3.68 percent on a volume of 9.20 million shares.
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