Canada's Augusta Resource Corp AZC.TO AZC.N urged its shareholders to reject HudBay Minerals Inc's (HBM.TO) hostile takeover bid on Monday, and said investors controlling more than one-third of its common shares plan to refuse the offer.
Augusta said directors, officers and shareholders that together hold more than 33 percent of Augusta's common shares on a fully diluted basis have said they do not plan to tender shares. It did not name specific investors.
Hudbay's hostile bid is conditional on securing the support of no less than two thirds of Augusta's shareholders. This suggests Hudbay would have to sweeten its bid in order to clinch a deal.
Shares in Augusta closed on Friday at C$3.58 on the Toronto Stock Exchange, well above the implied offer price of C$2.80 a share. Hudbay is offering Augusta shareholders 0.315 of a Hudbay share for each share held.
Augusta's Rosemont copper project in Arizona is considered to be one of the most promising in the United States, and Hudbay's bid came just weeks before Augusta was expected to receive the approvals that would let it begin construction.
"The unsolicited offer is grossly inadequate and does not come close to recognizing the full and fair value of Augusta and the world-class Rosemont project," Augusta executive chairman Richard Warke said in Monday's statement.
Augusta said the timing of the offer was "highly opportunistic."
Rosemont is expected to be the third-largest U.S. copper mine and account for as much as 10 percent of the country's copper output.
Hudbay, which owns about 16 percent of Augusta's outstanding shares, said earlier this month that the enterprise value of the all-stock deal could be about C$540 million ($485 million).
Augusta has scheduled a conference call with analysts and investors for 10 a.m. ET.
(Reporting by Allison Martell and Euan Rocha in Toronto and Ashutosh Pandey in Bangalore; Editing by Joyjeet Das and Meredith Mazzilli)