Felix Resources confirms China takeover bid

(Agencies)
Updated: 2009-08-14 10:53

SYDNEY: Shares in Australian miner Felix Resources Ltd leapt more than 5 percent Friday after the company approved an Australian dollars 3.32 billion ($2.8 billion) takeover bid from China's Yanzhou Coal.

The A$16.95-a-share offer is the latest bid by a Chinese state-owned company to buy a chunk of Australia's raw materials to guarantee the steel-making and other construction industries can meet the demands of China's booming economy.

Felix's board recommended the offer to shareholders on Thursday. The deal also requires the approval of foreign investment regulators and the Australian government.

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The company's shares came out of a trading halt on Friday, and immediately rose 5.44 percent to A$17.82. They were trading at A$16.90 before being suspended from trade on Monday pending an announcement on the deal.

The offer values Felix at A$3.32 billion, making the deal the largest takeover of an Australian company by a Chinese firm.

Chinese state-owned companies have made several attempts recently to buy big stakes in Australia, but their progress has been rocky.

Debt-laden Rio Tinto in June abandoned a $19.5 billion bid from China's Chinalco to increase its stake in the Anglo-Australian miner to 18 percent, a deal that met investor resistance and opposition from some politicians who said it was against Australia's national interest.

Minmetals Nonferrous Metals Co had to amend it's bid for Oz Minerals after the government said the Chinese company could not buy a mine that is located inside an Australian military area. The amended deal, worth A$1.7 billion, was approved by shareholders in June.

"The Yanzhou offer allows shareholders to benefit from the certainty of cash consideration which fully values Felix, without taking on the risks associated with Felix's next phase of growth," Felix Chairman Travers Duncan said in a statement.

Under the deal, Yanzhou would retain Felix's existing employees and management.