FMG sells off Atlas stake

Fortescue Metals Group has sold its blocking stake in Atlas Iron, after Gina Rinehart’s Hancock Prospecting increased its takeover offer for a second time last week.

Hancock upped its bid to 4.6 cents per share on Tuesday, taking the value of the deal to $427 million.

“Fortescue Metals Group advises that it has sold its 11 per cent shareholding in Atlas Iron to Hancock Prospecting subsidiary, Redstone Corporation, pursuant to its takeover offer following the announced increase in Redstone’s offer price to 4.6c per share,” Fortescue said in a statement to the ASX on Friday.

Hancock had previously increased its offer from the original 4.2 cents per share to 4.45 cents earlier this month.

The share sale increases Hancock’s stake to 88 per cent, just shy of the 90 per cent needed for compulsory acquisition.

Atlas also announced Friday that lenders have agreed to waive the event of default on an $86 million loan caused by Hancock owning more than 50 per cent of the company.

A 60-day put option beginning on October 3 has instead been granted, which could require Hancock purchase the debt.

Fortescue reduced its stake in Atlas from 19.9 per cent down to 11 per cent on August 6. 

Friday’s announcement effectively ends a three-way tussle for the junior, which began earlier this year.

In April, Atlas and Chris Ellison-controlled Mineral Resources struck a $280 million merger deal, which implied an offer price of 3.02 cents per share.

The following month, Atlas flagged an impairment of up to $100 million.

The landscape changed dramatically in June when Andrew Forrest’s Fortescue snapped up a 19.9 per cent slice of Atlas and threatened to block the MinRes takeover bid.

Just days later, Hancock took a similarly sized position, leading to speculation that the three miners were chasing development rights at Port Hedland, in addition to Atlas’s iron ore mining operation.

The state government then intervened and removed Atlas’s port development rights.

Atlas accepted a $390 million offer from Hancock on June 29.