Unites States company Cleveland-Cliffs is looking to spend nearly $600 million on acquisitions in Western Australia as it moves to fully own iron ore miner Portman Ltd and acquire a 30 per cent slice in explorer AusQuest Ltd.
Unites States company Cleveland-Cliffs is looking to spend nearly $600 million on acquisitions in Western Australia as it moves to fully own iron ore miner Portman Ltd and acquire a 30 per cent slice in explorer AusQuest Ltd.
The US company today launched a bid to acquire the remaining 14.81 per cent interest in Portman is does not already own, in an offer valued at about $560 million.
Cleveland, on of the US' largest iron ore producers, is offering $21.50 cash for each Portman share and has declared the bid last and final.
Shares in Portman leapt on the news, up $3.40, or 19.2 per cent to $21.10 at the end of trade.
The offer is scheduled to close on November 3.
Perth-headqaurtered Portman said that its independent directors would recommend the offer to shareholders, subject to the receipt of an opinion from independent expert KPMG.
The move on Portman follows a failed attempt by the company to gain two places on Perth-based Golden West Resources Ltd's board last month.
Portman holds a 19.2 per cent interest in Golden West and has previously said it was considering its options in relation to that investment.
Portman managing director Richard Mehan, who is also president and chief executive of Cleveland's Asia Pacific arm, has previously told WA Business News the company is open to Cleveland taking full control of the business.
Cleveland launched its initial takeover of Portman in 2005 but fell short of the 90 per cent threshold required to compulsorily acquire the company, emerging at the end of that calendar year with an interest of just over 80 per cent.
Meanwhile, AusQuest director John Ashley said he is not concerned of a takeover by Cleveland, which will take a 30 per cent stake in the Ardross-based minerals explorer.
Both companies today announced an alliance whereby Cleveland will subscribe to 66.7 million shares at a price of 40 cents apiece for a total of $26 million.
Cleveland will also be issued with about 29 million options with an exercise price of 40c each, set to expire at around the end of March 2011, which will take the US company's stake to 30 per cent on a fully diluted basis.
Mr Ashley said Cleveland has not said if it will launch a takeover for AusQuest.
"There's no knowing where it will go at the end of the day, the agreement we have with them includes a standstill clause for two years and in that time they can't buy anymore shares," Mr Ashley said.
"So they're locked in at 30 per cent.
"It doesn't really concern us at this point in time [a takeover] but who knows what may happen in the future, we have no control over it.
"All the indications are that we just keep on going."
Mr Ashley added that the cash injection will be used to advance its suite of projects across the country where the company is exploring for manganese, iron ore, copper and gold.
"We'll get several drill rigs out next year and really [the transaction] gives us an enormous opportunity to progress the projects," he said.
Cleveland will appoint a representative to the AusQuest board and have certain rights over any future sale or other disposal of AusQuest's assets.
The placement is subject to shareholder and Foreign Investment Review Board approval.
