Minmetals plans $6.5 billion bid for Equinox

MELBOURNE (Reuters) – China’s Minmetals Resources (1208.HK: Quote, Profile, Research) plans to make a C$6.3 billion ($6.5 billion) takeover bid for copper miner Equinox Minerals (EQN.TO: Quote, Profile, Research), looking to scupper Equinox’s own bid for Lundin Mining (LUN.TO: Quote, Profile, Research).

The deal is the latest in a string of copper mining takeovers, with deals seen as the quickest way to boost production to take advantage of copper prices trading near record highs.

Minmetals, which owns mining operations in Australia and Asia, said Monday it would offer C$7 per share for Equinox, a 23 percent premium to Equinox’s close in Toronto last Friday of C$5.71.

“I would describe it as a realistic offer but not a knock-out bid,” said James Bruce, portfolio manager at Perpetual which recently sold its Equinox shares.

“It’s a cleverly timed bid by Minmetals. We thought Equinox were paying too much for Lundin and were taking on too much debt in that deal.”

Minmetals also seemed to agree that the C$4.7 billion bid for Lundin was not in the company’s best interest and said its own bid would be conditional on Equinox dropping the offer for Lundin.

The main attraction in Sydney and Toronto listed Equinox are its Lumwana copper and uranium mine in Zambia and its Jabal Sayid copper development in Saudi Arabia.

The bid comes a week ahead of the expiry of Equinox’s offer for Lundin, which itself called off a merger with Canadian peer Inmet Mining (IMN.TO: Quote, Profile, Research) last week that was to create a C$9 billion Canadian copper producer.

Minmetals said it submitted an application to Australia’s Foreign Investment Review Board (FIRB) on March 11 and that it did not expect any issues getting Canadian regulatory approval as Equinox’s key operations are outside Canada, in Zambia and Saudi Arabia.

Chief Executive Andrew Michelmore told reporters he expected to receive approval in time to go ahead with the deal by mid-2011.

It plans to fund the offer from existing cash reserves, credit facilities from Chinese banks and equity including financial investments in the company by Chinese institutions.

Deutsche Bank and Macquarie are advising Minmetals on the offer.

(Reporting by Sonali Paul; additional reporting by Miranda Maxwell and Michael Smith; Editing by Balazs Koranyi)

Minmetals plans $6.5 billion bid for Equinox