Mining group Xstrata was thwarted in its takeover ambitions on Friday after Indophil Resources of Australia recommended a A$540m ($515m, £261m) management buy-out over its hostile A$426m takeover bid.
Indophil’s main asset is a 34 per cent share of the Tampakan copper-gold project in the Philippines, in which London-listed Xstrata owns a 62.5 per cent stake.
Xstrata offered A$1 a share for Indophil on May 15, a 28 per cent premium to the group’s share price at the time, and valuing the company at A$426m. But Indophil rejected this offer as too low and on Friday Richard Laufmann, its chief executive, launched the rival takeover bid backed by Alsons Group of the Philippines and Crosby Capital Partners of Hong Kong.
His consortium is offering A$1.28 a share in cash, and Indophil’s independent directors on Friday unanimously recommended the bid as presenting “significantly superior value to Indophil shareholders as compared with the Xstrata offer”.
Indophil says the Tampakan project, which Xstrata manages, is the largest unexploited copper-gold deposit in south-east Asia. Mr Laufmann said last week that Xstrata’s “unsolicited, conditional low-ball offer grossly undervalues Indophil’s key asset”, and that Xstrata was trying to buy Indophil before it published the findings of the feasibility study on Tampakan, “which are expected to confirm a significant increase in Tampakan’s value”.
Shares in Indophil jumped 20 per cent to A$1.38 on Friday, indicating that the market expects Xstrata to raise its offer. But after the market closed, it said: “Given the significant risks and costs associated with the Tampakan copper project …and the significant premium which has been offered by the Crosby Capital Consortium, Xstrata has chosen not to match the competing offer at this time.”
Xstrata said it would review its position after meeting Lion Selection, Indophil’s largest investor, on June 23. Lion Selection last month agreed to sell a 17.8 per cent stake in Indophil to Xstrata, but said on Friday it might reconsider if Xstrata did not match the latest offer. Xstrata closed down 60p at £41.98.