Midwest management backs Sinosteel takeover

Investment

30 April 2008

The management of Australian mining group Midwest Corp has come out in support of Sinosteel's hostile takeover bid after the Chinese company raised its offer by 14% to US$1.3 billion, the South China Morning Post reported. Sinosteel, China's second-largest iron ore trader, increased its stake in Midwest to 19.9% in January and tabled an offer of A$5.60 (US$5.22) per share in February, which was rejected. The offer now stands at A$6.38 (US$5.95) per share on the condition that the Chinese company will take at least 50.1% of Midwest. Sinosteel has also taken a 2.4% stake in another Australian mining group, Murchison Metals. Murchison holds assets adjacent to those of Midwest, and market watchers expect the Chinese company ultimately to attempt to merge the two miners. However, there have been reports recently of the Australian government moving to restrict Chinese interest in the country's natural resources. Steelmaker Shougang recently saw its bid for a stake in iron ore miner Mount Gibson blocked by Australia's regulators.

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