Norilsk Nickel Offers C$4.73 Billion for LionOre
This will put fire into nickel stocks again! Buy nickel junior boys!!!
By Brett Foley
May 3 (Bloomberg) -- OAO GMK Norilsk Nickel, the world's largest nickel producer, offered C$4.73 billion ($4.28 billion) to buy LionOre Mining International Ltd., seeking to break up Xstrata Plc's agreement to buy the Canadian company.
Norilsk's offer of C$21.50 in cash is 16 percent more than the C$18.50-per-share bid made on March 26 by Zug, Switzerland- based Xstrata. Moscow-based Norilsk's offer, announced today in a statement, is 14 percent more than LionOre's closing price in Toronto yesterday.
``Xstrata will likely make a rival offer to secure the bid,' said John Meyer, an analyst in London at Numis Securities Ltd. ``They don't like to lose things.'
LionOre is being pursued for its nickel mines in Australia and Africa as the metal, used in stainless steel, trades close to a record. Mergers and acquisitions in the mining industry show no sign of abating as metal prices soar. There have been 208 deals worth $59 billion announced in 2007, compared with 234 valued at $41 billion in the same period last year.
Shares of LionOre jumped 137.5 pence, or 16 percent, to 987.5 pence as of 10:29 a.m. in London. No-one from LionOre was immediately available for comment.
Xstrata's offer is due to close on May 25 and carries a break fee of C$131 million. Xstrata said in March it had secured an irrevocable ``lock-up' arrangement with shareholders including directors for 19 percent of the company.
Claire Divver, a London-based Xstrata spokeswoman, declined to comment when contacted by telephone today.
`Diversification'
The combination of Norilsk and LionOre would give ``greater scale in key commodities' and ``enhanced geographic diversification,' Norilsk General Director Denis Morozov said in the statement. Norilsk wants to secure at least two thirds of acceptances from LionOre shareholders, the company said.
Norilsk's offer is about 7.5 times LionOre's earnings before interest, tax, depreciation and amortization, or ebitda based on the four quarters through the end of 2006. Xstrata's bid was 5.4 times the Canadian company's ebitda, according to data compiled by Bloomberg.
The value of Norilsk's bid was calculated using the 220.1 million shares of LionOre that are outstanding according to Bloomberg data. Norilsk said its offer was worth C$5.3 billion.
Dmitry Usanov, a Moscow-based spokesman for Norilsk, wasn't immediately available for comment.
To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net
Last Updated: May 3, 2007 05:32 EDT
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