Sinosteel ups Midwest stake to 43.6%

Chinese steel making giant Sinosteel Corporation has increased the likelihood of spoiling the proposed merger between takeover target Midwest Corporation Ltd and Murchison Metals Ltd, by lifting its stake in the iron ore producer.

Sinosteel, which is offering $6.38 cash for every Midwest shares, has increased its stake in the miner from 40.09 per cent to 43.62 per cent.

The Chinese group requires 45 per cent of Midwest to block a planned `reverse takeover' of the company by iron ore miner Murchison.

Murchison last month proposed the reverse takeover for Midwest, which was engineered to prevent Sinosteel, which at the time held 19.89 per cent of Midwest, from blocking the deal.

The merger proposal would be via a scheme of arrangement, with the consideration offered being 0.575 shares in Midwest for each Murchison share.