* Equinox says Minmetals bid undervalues the company
* Says bid a long way off from being a formal offer
* Equinox shares still well above offer price
* Investors wait for higher offer to emerge
(Adds details, background, Equinox shares)
By Euan Rocha and Victoria Thieberger
TORONTO/MELBOURNE, April 8 Equinox Minerals
said on Thursday that Minmetals Resources'
C$6.3 billion ($6.57 billion) bid undervalued the
company and was still a long way from being a formal offer.
China, which accounts for 40 percent of the world's
demand for copper, is on a mining acquisition spree and is
chasing Equinox's copper assets in Zambia and Saudi Arabia as
prices for the red metal hover near record highs.
"We consider that the lowball price announced by MMR
significantly understates our value and disregards the potential
of this company, especially in light of the continuing strength
in copper prices," said Equinox Chairman Peter Tomsett in a
Tomsett said no formal offer had been made, and nor was
one expected for several weeks.
Equinox shares trading in Sydney eased 0.3 percent
after the statement, but at A$7.46 remain well above the
Minmetals C$7 per share offer, indicating investors expect a
higher offer to emerge.
The shares in Toronto closed at C$7.50 before the
statement came out.
Investors said it was possible rival bidders could
emerge for Sydney- and Toronto-listed Equinox, but said they may
be deterred by Minmetals' financing power.
"There is still a way to go on this. It is not without
the possibility that another party may come in and take a look,"
said Northward Capital portfolio manager Michael Bentley.
"There are not a lot of copper assets like this around
the world at the moment that have 40-year mine lives, and not a
lot of new projects," Bentley said.
While Minmetals has a market value of just $2.5
billion, the metals trading firm said its bid was being funded
with credit from Chinese banks and equity investments by Chinese
The main attractions at Equinox are its Lumwana copper
and uranium mine in Zambia, Africa's third-largest copper mine
by production, and the Jabal Sayid copper development in Saudi
Arabia, due to start production next year.
Those mines could attract Xstrata , Antofagasta
, Vedanta Resources and possibly Norilsk Nickel
, analysts said .
Equinox noted that the bid by Minmetals -- a
state-controlled Chinese entity -- will require the approval of
China's National Development and Reform Commission, which has
yet to be received.
The Chinese bid also requires the approval of Minmetals' own
shareholders. While ChinaMinmetals Corp, Minmetals' largest
shareholder, has agreed to vote in favor of the deal, the vote
will only be held after the NDRC approves the bid.
The Minmetals shareholders meeting is not expected to occur
until sometime in June, Equinox said, adding that it can only
respond to Minmetals after a formal offer is submitted.
It would be China's fourth-biggest outbound M&A deal,
according to Thomson Reuters data.
Equinox alleged in its statement that the Minmetals bid
merely seeks to frustrate Equinox's own bid for Canadian rival
Lundin Mining . The Toronto-based miner contends that
its offer for Lundin would add significant value for
shareholders of both companies.
However, a senior Canadian M&A banker, who asked not to be
named, said Equinox's chances of clinching a deal with Lundin
were extremely low in light of the Minmetals bid.
"I think that's over. The thing about Equinox is they really
stretched to go after Lundin financially. Their shareholders
didn't like it, their stock came off, and that put them right
square in the sights of Minmetals," he said.
"It was a bit of a miscalculation on their part because it
exposed them to a hostile takeover, which is exactly what
happened," he added.
C$ = $1.043
(Reporting by Euan Rocha and Pav Jordan in Toronto and Victoria
Thieberger in Melbourne; Editing by Ed Davies)