Australia's Arrium rejects $1 bln bid from Noble, Posco group
SYDNEY Oct 1 (Reuters) - A consortium including Noble Group and Posco has bid A$1.01 billion ($1.04 billion) for Australian mining and steel company Arrium , joining a string of firms aiming to cash in on a drop in the value of resource firms due to tumbling commodities prices.
Arrium rejected the offer, which at A$0.75 a share represented a 37.6 percent premium to its close on Friday, calling it undervalued and conditional.
"We have carefully considered the proposal. We believe that the proposal undervalues Arrium, and is not in the best interests of Arrium shareholders," Arrium Chairman, Peter Smedley said in a statement on Monday.
"We also believe that the highly conditional nature of the proposal carries significant risk."
The company's shares were trading above A$0.75 as recently as Aug. 29.
"It is a reasonable premium to the last close, but obviously not compared with where the stock has been trading recently," said Luke Sinclair, investment manager at Karara Capital in Melbourne.
A shake-out from sliding iron ore and coal prices has touched off a spate of asset sales as tough times spread from Australia to Indonesia in what has been a lean year in the mining sector.
Cashed-up Japanese, Korean and Chinese buyers are cherry picking mining assets, investment bankers and lawyers say.
Asia-Pacific mining deals so far this year total $47.6 billion, down 23 percent from a year earlier, Thomson Reuters data shows but there are signs of a revival in appetite as near record low valuations spur activity.
Shares in Arrium, which earlier this year changed its name from One Steel Ltd to reflect its shift towards a diversified global mining and materials business and to attract new investors, has fallen over a fifth this year as iron ore prices dropped to a near three-year low.
Arrium said the consortium was comprised of Noble Group, POSCO Australia, National Pension Service of Korea, Korea Investment Corporation and Korea Finance Corporation. ($1 = 0.9616 Australian dollars) (Reporting by Narayanan Somasundaram and Victoria Thieberger; Editing by Ed Davies)
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