Canada's Lundin Mining has told its shareholders to reject Equinox Minerals' $4.9 billion hostile takeover, saying it is "financially inadequate" because of the number of conditions attached to the offer.
Lundin Mining chairman Lukas Lundin said the company's board of directors was unanimous that shareholders should reject the offer.
"The offer has such extensive conditions that even if the amount of the offer was not so financially inadequate, the board would not recommend that shareholders accept the offer because we have no confidence that it would ever close," Mr Lundin said in a statement to the Toronto Stock Exchange.
Lundin chief executive Phil Wright said shareholders should remain wary of the offer, and carefully review its supporting information.
"Taking on US$3.2 billion in debt on partially undisclosed terms, and the basis of their production forecasts are two things in particular to reflect on," Mr Wright said.
"Equinox is essentially asking shareholders to grant them an option to acquire Lundin Mining, at their discretion, and their lenders discretion, at a price that is inadequate and containing substantial risks if implemented."
Lundin's statement said it was concerned a successful takeover would result in a company with increased exposure to geopolitical risks in Zambia and Saudi Arabia, due to the location of Equinox' assets.
The company's board also said it held reservations about the capabilities of Equinox' management to operate a multi-mine company with projects and mines spread across seven countries.
"There are no strategic benefits for Lundin Mining shareholders under the Unsolicited
Offer," the statement said.
"The acquisition results in a company with high Africa and Middle East concentration and few, if any synergies with Lundin Mining's business"
Equinox launched the takeover bid last month, offering Lundin shareholders a combination of cash and Equinox shares for a total consideration value of $C8.10 per Lundin share.
The combined group would have a targeted 23 per cent compound annual growth rate in copper production over the next six years, culminating in planned output of about 500,000 tonnes of copper per year by 2016.
The bid rivals the target's merger plan with fellow Canadian miner Inmet Mining Corporation.
Lundin and Inmet, which mines copper and zinc, announced in January "a merger of equals" in a transaction valued at about $C9 billion.
