Equinox bid foils merger
The Age
Thursday March 31, 2011
CANADA'S Lundin Mining is searching for a white knight bidder to oppose the hostile $C4.8 billion ($A4.78 billion) cash-and-share bid from ASX-listed Equinox Minerals.The hunt comes as the Equinox bid, with the unlikely help of the Panamanian government, succeeded in derailing the early plan by Lundin to merge with fellow Canadian miner Inmet Mining in an all-scrip deal.The death of the Lundin-Inmet tie-up was expected given that it was a "nil premium" marriage while the Equinox offer implied a 26 per cent premium for Lundin on the day of its launch.Panama helped Equinox's cause by casting doubts on the future development of one of Inmet's key growth projects, the $5.3 billion Cobre Panama copper project. Last month Panama's President, Ricardo Martinelli, jangled investors' nerves when he said that personally, at least, he did not like miners nor mines. "To reiterate it once again, I don't care at all, not even a little bit or a tiny bit, about mining," he said.These comments were followed by a recent threat to Inmet's plans to power Cobre Panama using coal-fired power.Lundin said it would now explore its alternatives. "We will be actively and aggressively looking for the best-value transaction," the company said.Lundin and Inmet are clearly upset that Equinox derailed their earlier merger plans. This was reflected in the agreement between Lundin and Inmet that Inmet would still get a $120 million break fee should Equinox go on and win its bid for Lundin. A counter-bidder to Equinox would not face such a penalty.The Canadian pair also lamented the death of their merger. "This merger would have created a leading copper producer with benefits for both companies' shareholders," they said. Equinox could say the same with its Lundin bid.Equinox is offering $C8.10 in cash, or 1.2903 shares and C1, for every Lundin share, based on a maximum cash outlay of $C2.4 billion. Based on a 50:50 mix of cash and shares, the offer at present values Lundin at $C7.59 a share the same price at which Lundin last traded.
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