December 17, 2012 / 4:00 AM / 5 years ago

Canada's First Quantum sweetens unsolicited bid for rival Inmet

Dec 16 (Reuters) - First Quantum Minerals Ltd sweetened its unsolicited bid for Inmet Mining Corp, valuing the smaller rival at about C$5.1 billion ($5.17 billion), and said the combined entity could potentially become one of the world’s top copper producers.

As per the new proposal, First Quantum is offering up to C$2.5 billion in cash and would issue a maximum of 115.9 million shares, in a deal that values Inmet at C$72 a share, or C$5.1 billion. This follows an initial bid of C$62.50 that was put forward by First Quantum in October, which was later raised to C$70.

Inmet shareholders can opt to receive either C$72 per share in cash, or 3.2962 First Quantum shares plus 1 Canadian cent. Inmet stockholders also have an option to go for a mix of C$36 in cash plus 1.6484 First Quantum shares.

Shares of Inmet closed at C$69.83 Friday on the Toronto Stock Exchange.

Toronto-based Inmet, which is building the Cobre Panama copper mine in Central America, had earlier turned down the C$4.86 billion unsolicited proposal from First Quantum, saying the offer was “highly conditional” and not in the best interests of its shareholders.

Vancouver, British Columbia-based First Quantum, which owns assets in Africa, Australia, South America and Europe, said on Sunday the combined entity could become one of the top-five copper producers in the world within five years, with the potential to produce more than 1.3 million tonnes per annum of copper by 2018.

“Our clear preference remains to engage with Inmet, as we believe strongly in the compelling strategic and financial merit of the transaction,” First Quantum Chief Executive Philip Pascall said in a statement.

Inmet’s top three shareholders own close to 40 percent of the company’s stock, according to Thomson Reuters data. Without their support, First Quantum would face an uphill battle if it seeks to go hostile.

The cash component of the deal will be financed through a combination of First Quantum’s existing cash resources and a $2.5 billion facility which is being arranged specifically to implement the offer, the company said.

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