Reuters Summit-UPDATE 1-Equinox seen as ideal test for China Inc

(For other news from the Reuters Global Mergers and
Acquisitions Summit, click:

* Minmetals unlikely to face regulatory obstacles on bid

* Equinox’s overseas asset base eases path for Minmetals
(Adds details from Summit session, background)

By Euan Rocha

TORONTO, April 5 (Reuters) – China’s Minmetals Resources
(1208.HK: Quote, Profile, Research) C$6.3 billion bid for Equinox Mineral (EQN.TO: Quote, Profile, Research) is the
perfect test case for state-controlled Chinese entities looking
to acquire overseas mining assets, Canadian bankers told the
Reuters Global Mergers and Acquisitions Summit on Tuesday.

Equinox, target of an unsolicited offer from Chinese metals
trader Minmetals, is a Canadian company with listings in both
Canada and Australia. While the majority of its board is based
in Canada, Equinox’s chief executive is based in Australia and
its assets are spread across Africa and the Middle East.

“I don’t think they could have picked a better target, or
timing to try a hostile bid and see what the reaction is,” said
John Tuer, managing director for mergers and acquisitions at
Scotia Capital, the investment banking arm of Bank of Nova
Scotia (BNS.TO: Quote, Profile, Research).

Tuer noted the very fact that Equinox itself is entangled
in a hostile battle to acquire rival Lundin Mining (LUN.TO: Quote, Profile, Research)
also bodes well for Minmetals.

“As a test case for them, it’s about as good a fact-set as
you could have,” he said, while speaking at the Toronto-leg of
the Reuters Summit.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For Main Story on Minmetals bid [ID:nL3E7F30DI] DEALTALK on Equinox becoming a target: [ID:nL3E7E107P] For Breakingviews: [ID:nLDE7330JN] For Dealtalk on M&A in copper sector: [ID:nN22134808] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

State-controlled Chinese entities have for the most part
focused on joint-ventures, resource off-take agreements and
minority stakes in foreign mining companies, as they attempt to
sate China’s growing appetite for metals and other

“Given the fact that the great majority of the assets and
operations are abroad. It is less likely to be a controversial
issue than lots of other potential targets,” said Andre Hidi,
who heads the global mergers and acquisitions group at BMO
Capital Markets, the investment banking arm of the Bank of
Montreal(BMO.TO: Quote, Profile, Research).

Chinese firms, including Minmetals itself, have in the past
run into issues while trying to seal overseas deals in Canada,
Australia and other parts of the world.

In 2009, China Non-Ferrous Metal Mining Co was blocked from
buying a controlling stake in Australian rare earths miner
Lynas Corp (LYC.AX: Quote, Profile, Research). Australia also blocked Minmetals bid for
Oz Minerals’ Prominent Hill copper and gold mine because the
mine was too close to a defence rocket range.

Minmetals attempt to acquire former Canadian nickel miner
Noranda back in 2004, also ran aground after unions and
politicians voiced strong objections to the bid.

“The government has said in the past that it would pay
particular attention to transactions involving sovereign
controlled entities,” said Peter Buzzi, managing director and
co-head of mergers and acquisitions at Canada’s largest bank,
the Royal Bank of Canada (RY.TO: Quote, Profile, Research).

“They haven’t really given any direction to what that means
and how they are going to look at them,” said Buzzi. “But
certainly, any sovereign controlled entity is going to attract
increased focus.”
(For top stories from the Reuters Global Mergers and
Acquisitions Summit, see [ID:nN01283917])
(Reporting by Euan Rocha; editing by Gunna Dickson, Bernard

Reuters Summit-UPDATE 1-Equinox seen as ideal test for China Inc