Noble trumps Exxaro bid for Australia’s Territory

By Sonali Paul and Agnieszka Flak

MELBOURNE/JOHANNESBURG, June 9 (Reuters) – Shares in Australian iron ore miner Territory Resources jumped rose by over 10 percent on Thursday after commodities firm Noble Group made a A$132.6 million (US$141 million) bid, trumping an offer from South African miner Exxaro.

The offer of A$0.50 a share from Hong Kong-based Noble Group, which already owns 30 percent of Territory, is 9 percent better than Exxaro’s bid and 6 percent above Territory’s last closing price.

Territory shares closed up 10.6 percent at A$0.52 per share while shares in Johannesburg-listed Exxaro were up 0.3 percent at 159.45 rand by 1104 GMT. Noble’s shares closed unchanged in Singapore at S$2.01.

“By making this offer to secure our holding in Territory, we aim to ensure that its attention on growth will not in future run the risk of being deflected by any more opportunistic corporate actions,” Noble said.

Exxaro, one of South Africa’s largest coal miners, said it was reviewing its position after the Noble offer, although analysts said it was unlikely to make a higher bid.

“Investors would be quite happy if Exxaro decided to do no more on this and let Noble have it. It doesn’t necessarily fit their strategy given its location and how little ore there is left in that asset,” said a Johannesburg-based analyst.

Exxaro launched its offer last month as part of a plan to buy several iron ore assets and eventually produce 10 million tonnes a year.

Analysts have said Exxaro’s bid, pitched at a 64 percent premium to Territory’s share price at the time, was expensive given the short three- to five-year life span of Territory’s mine in Australia’s Northern Territory.

“I’d prefer Exxaro spending that same money on some early stage prospect in West Africa where we know there is lots of iron ore … generally something in Africa would seem to be a better investment for them,” another analyst said.

“Exxaro doesn’t have the fire power to compete for some of the exciting existing assets because there is such a demand for those assets at the moment.”

Exxaro, which also mines mineral sands and zinc, already has an indirect exposure to the iron ore business through its 20 percent stake in Sishen Iron Ore, majority owned by Kumba Iron Ore, but has been scouting Australia and Africa for investments.

Territory Resources said the board would meet Thursday to review the Noble offer.

Noble has appointed Investec as broker to the offer. Exxaro is being advised by RMB Corporate Finance, a unit of South Africa’s FristRand and Greenhill Caliburn. Azure Capital is advising Territory. ($1 = 0.942 Australian dollars) (Additional reporting by Olivia Kumwenda; Editing by Greg Mahlich)