Sinosteel proposes $1.19b Midwest takeover

07/12/2007 - 10:52

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Chinese steelmaker Sinosteel is proposing a cash takeover offer for iron ore miner Midwest Corporation Ltd that values the target at $5.60 per share, well above Murchison Metals Ltd's floundering scrip offer.

Sinosteel proposes $1.19b Midwest takeover

Chinese steelmaker Sinosteel is proposing a cash takeover offer for iron ore miner Midwest Corporation Ltd that values the target at $5.60 per share, well above Murchison Metals Ltd's floundering scrip offer.

Sinosteel's move will shore up its strategic interest in the Mid West iron ore province, and follows its work with Midwest Corp on the joint venture development of iron ore mines in the region.

Midwest said there was no certainty that the Sinosteel proposal would lead to a transaction.

Murchison will be forced to substantially improve the value of its scrip offer if it wants to have any chance of acquiring Midwest.

Based on Murchison's closing share price today of $3.91, its offer values Midwest at $3.62 per share.

The two companies hold adjacent tenements and have been developing competing plans for rail and port infrastructure.

Shares in Midwest were trading at $4.85 when the company called a trading halt today, taking its gains over the past three days to 84 cents or 21 per cent.

The Murchison announcement followed denials earlier today by Gindalbie Metals Ltd, which denied it was in discussions with Midwest regarding a potential takeover, and Fortescue Metals Group Ltd, which denied it had acquired a shareholding in Midwest.

Recent media reports suggested that Gindalbie, along with Sinosteel, were two of the parties Midwest was referring to yesterday when it revealed that it was in discussions with "parties interested in pursuing corporate transactions".

Gindalbie also rejected today a media claim that its Karara Iron Ore Project was dependent upon the railway and port infrastructure proposed for Oakajee.

"Gindalbie seeks to clarify to the market that it is not in discussions with Midwest Corporation Limited regarding a takeover proposal, and further that Gindalbie's stage 1 development of the Karara Iron Ore Project is not dependent upon the development of Oakajee or its related infrastructure," it said in a statement.

Fortescue said in a statement it refuted any suggestion that it had acquired an interest in Midwest and remained totally focused on its iron ore and infrastructure project in the Pilbara.

A Midwest announcement appears below:

 


ASX ANNOUNCEMENT - MIDWEST IN DISCUSSIONS WITH SINOSTEEL
Following speculation in the market, Midwest Corporation Limited (ASX:MIS) confirms it has received a proposal from Sinosteel Corporation to acquire all of the issued capital in Midwest.

The proposal is for $5.60 cash per Midwest share and is incomplete, non-binding, subject to due diligence and a number of other conditions.

There is no certainty that this proposal will lead to a transaction.

The Board of Midwest continues to recommend shareholders to take NO ACTION in relation to Murchison's offer.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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