Equinox highlights risks to Minmetals bid

TORONTO (Reuters) – Equinox Minerals (EQN.TO: Quote, Profile, Research) said on Thursday that Minmetals Resources’ (1208.HK: Quote, Profile, Research) C$6.3 billion bid undervalues the company and highlighted that the bid by the Chinese metals trader was still a long way off from being a formal offer.

“We consider that the lowball price announced by MMR significantly understates our value and disregards the potential of this company, especially in light of the continuing strength in copper prices,” said Equinox Chairman Peter Tomsett in a statement on Thursday.

“Although MMR’s intention has been announced publicly, no formal offer has been made nor offer documents received and according to public comments by MMR, none are expected for several weeks,” Equinox noted.

The Canadian base metal miner also noted that the bid by Minmetals — a state-controlled Chinese entity — will require the approval of China’s National Development and Reform Commission, which has yet to be received.

The Chinese bid also requires the approval of Minmetals’ own shareholders. While ChinaMinmetals Corp, Minmetals’ largest shareholder, has agreed to vote in favor of the deal, the vote will only be held after the NDRC approves the bid.

The Minmetals shareholders meeting is not expected to occur until sometime in June, Equinox said, adding that it can only respond to Minmetals after a formal offer is submitted.

Equinox alleged that the Minmetals bid merely seeks to frustrate Equinox’s own bid for Canadian rival Lundin Mining (LUN.TO: Quote, Profile, Research). The Toronto-based miner contends that its offer for Lundin would add significant value for shareholders of both companies.

However, a senior Canadian M&A banker, who asked not to be named, said Equinox’s chances of clinching a deal with Lundin were extremely low in light of the Minmetals bid.

“I think that’s over. The thing about Equinox is they really stretched to go after Lundin financially. Their shareholders didn’t like it, their stock came off, and that put them right square in the sights of Minmetals,” he said.

“It was a bit of a miscalculation on their part because it exposed them to a hostile takeover, which is exactly what happened,” he added.

(Reporting by Euan Rocha and Pav Jordan in Toronto, additional reporting by Gowri Jayakumar in Bangalore; Editing by Phil Berlowitz)

Equinox highlights risks to Minmetals bid