* Bid document to be sent out in early June
* Aquila response due in mid-June
* Aquila shares trade above A$3.40 a share offer
(Adds Baosteel, Aquila comments)
SYDNEY/MELBOURNE, May 29 The Australian
government cleared on Thursday a $1 billion bid by Chinese
state-owned Baosteel Resources for iron ore miner Aquila
Resources Ltd, removing the only regulatory hurdle to
The approval from the Australia Foreign Investment Review
Board puts Baosteel and its bidding partner, rail company
Aurizon Holdings Ltd, a step closer to taking over
Aquila, which would give them stakes in a $7 billion iron ore
mine, rail and port project and a coal mine.
The biggest obstacle to the deal, which values Aquila at
A$1.42 billion, is support from its founder, Tony Poli, who
holds a 29 percent stake. For the takeover to succeed, the
suitors need the approval of at least half of Aquila's share
Poli has yet to make any public comments on the bid.
Baosteel and Aurizon plan to send the formal bid to
shareholders in the first week of June, after which Aquila will
have 14 days to respond.
"We're all on track. A significant condition has been met.
We think we have a compelling offer for shareholders, especially
when you look at where iron ore prices are," Baosteel's
Australian spokesman, Greg Baxter, told Reuters.
Aquila's board has said little about the offer except to
tell shareholders to take no action while independent directors
Baosteel already owns a 20 percent stake in Aquila. Along
with Aurizon, it is offering A$3.40 a share, a 39 percent
premium to Aquila's share price the day before they first
announced the takeover bid in early May.
Aquila's shares last traded at A$3.51, implying investors
expect a deal to go ahead at a higher price.
Baosteel, China's second largest steel maker, wants Aquila
for its 50 percent stakes in the Eagle Downs coking coal mine
and the West Pilbara Iron Ore project, which has been on ice
Baosteel said it had grown frustrated with delays on the
iron ore project and wanted to kick start the development by
taking over Aquila. Aurizon's goal is to take control of the
rail and port tied to the project and open them up to other
West Pilbara Iron Ore project is co-owned by South Korean
steel giant POSCO and U.S. based investor AMCI,
which have both said they remain committed to the project.
The Eagle Downs coal project is co-owned by Brazil's Vale SA
(Reporting By Byron Kaye and Sonali Paul; Editing by Miral