* First Quantum extends hostile bid for Inmet to March 21
* Majority of Inmet shareholders tender shares in favor
* Inmet shares firm on TSX
By Euan Rocha
TORONTO, March 12 First Quantum Minerals Ltd
moved closer to clinching its acquisition of fellow
Canadian miner Inmet Mining Corp on Tuesday after a
majority of the miner's shareholders tendered shares in favor of
First Quantum's $5 billion hostile bid.
First Quantum said a total of 43.2 million Inmet shares, or
about 61.5 percent of its outstanding shares, had been tendered
in favor of its offer. Vancouver, British Columbia-based First
Quantum has now extended the offer to 11:59 p.m. EDT (1559 GMT)
on March 21.
The endorsement from Inmet's shareholders takes First
Quantum a step closer to buying Inmet and gaining control of
Inmet's prized Cobre Panama project. The $6.2 billion project in
the Central American country is one of the world's largest
undeveloped copper deposits, and winning it would ease First
Quantum's dependence on mines in Africa, particularly Zambia.
Toronto-based Inmet has urged its shareholders to reject
First Quantum's offer, arguing it is inadequate. The miner has
been attempting to sell a minority stake in Cobre Panama to
boost its value and put it in a stronger negotiating position.
Barring a curve ball from Inmet, however, analysts believe
that First Quantum has all but clinched the deal.
"Given that there are no other bidders, this really ought to
be finished by March 21," said George Topping, an analyst at
Stifel Nicolaus. "I think we can say we will finally be getting
this behind us."
Inmet, which also owns mines in Turkey, Spain and Finland,
has been the subject of takeover rumors for a months. In
mid-November, it denied that it was in talks with any party,
only to disclose later that month that it had received an
unsolicited bid from First Quantum.
"This has been on the go for a long time and there has been
nobody coming forward to make another bid. It is very unlikely
anything changes, between now and March 21," Topping said.
Some analysts say that since a majority of Inmet's
shareholders have shown they favor First Quantum's bid, Inmet
could face legal challenges if it attempts to scupper the First
Quantum offer at this point by selling a minority interest in
Barclays Capital analyst Ian Rossouw also said a First
Quantum takeover of Inmet is positive for the development of
"We believe that the strong management team at First Quantum
should help the existing project team at Inmet to deliver the
vast Cobre Panama project on time and within budget," he said in
a note to clients.
FIRST QUANTUM OFFER
Inmet has said it would be willing to enter discussions with
First Quantum if the company made a fair offer. David Ryan, a
spokesman for Inmet, declined to comment on the results of the
tender offer on Tuesday.
First Quantum said its offer has been tweaked to allow it to
go forward if more than 50 percent of Inmet's outstanding shares
are deposited before the offer's new expiration. The offer was
previously contingent on more than two-thirds of the shares
being tendered in favor of the deal.
The cash-and-stock bid, which was earlier set to expire at
11:59 p.m. EDT on Monday, was worth roughly C$5.1 billion ($4.97
billion) or C$72 a share, when it was announced in December.
Inmet shareholders have the option to get paid all in cash,
all shares, or a mix. The offer is subject to a maximum cash
outlay of about C$2.5 billion and a maximum aggregate number of
First Quantum shares issued of about 115.9 million, representing
an overall mix of 50 percent cash and 50 percent shares.
Assuming a mix and based on the closing price of First
Quantum shares on the Toronto Stock Exchange on Monday, the
offer valued Inmet at C$70.02. Inmet shares, which closed at
C$68.63 on the Toronto Stock Exchange on Monday, rose to trade
in line with the First Quantum offer price on Tuesday.
They closed C$1.35 higher at C$69.98, while First Quantum
shares were up 5 Canadian cents at C$20.69.
First Quantum also tweaked its bid to allow eligible holders
of Inmet shares who elect to receive First Quantum shares to
enjoy a tax-free rollover for Canadian income tax purposes.
"We believe this would also incentivize more Canadian
shareholders to tender into the offer," Rossouw said.