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First Quantum wins over key Inmet shareholder

by Laura Board  |  Published January 11, 2013 at 8:58 AM
gold101211.gifCanada's First Quantum Minerals Ltd. late Thursday, Dec. 10, received a major boost to its hostile C$5.1 billion ($5.17 billion) campaign to acquire Inmet Mining Corp. when the biggest shareholder in the Toronto copper miner pledged to tender its stock.

Leucadia National Corp., of New York and Salt Lake City, said it would tender its 15.9% holding unless new information came to light, including a better takeover proposal.

The investor's support is a major boost for a bidder whose takeover plan was complicated in late November when Inmet adopted a shareholder rights plan, or poison pill, that would allow existing shareholders to buy stock at half the market price.

Inmet's share closed on Thursday at C$71.92, falling below First Quantum's sweetened C$72 offer for the first time since it improved its bid last month.

Vancouver, British Columbia-based First Quantum is offering a choice of C$72 per share in cash, 3.2967 First Quantum shares, or C$36 in cash and 1.6484 First Quantum shares. The cash portion of the offer will be limited to C$2.5 billion, meaning the overall offer is a roughly 50-50 mix of cash and shares.

On Wednesday First Quantum said it had put the offer directly to shareholders, following through on a threat it made Dec. 17, when it improved an earlier C$70 per share bid.

In response, Inmet, whose chairman is David R. Beatty, said Wednesday it will form a special committee to evaluate the bid, promising to "carefully consider, among other things, whether or not the First Quantum offer adequately compensates our shareholders for Inmet's full value," including an expected leap in production once its Cobre Panama copper and gold project starts operating.

Inmet said Wednesday it would make a formal recommendation within 15 days.

First Quantum, which mines copper, nickel and gold in Africa and Australia, is making the offer to gain control of the 26 billion pounds of copper reserves and 7.3 million ounces of gold at the Cobre Panama project. Inmet owns 80% of the Panama-based project, as well as operations in Finland, Spain and Turkey.

A combined Inmet and First Quantum would rank among the world's top five copper producers, with the potential to produce about 1.3 million tons per annum by 2018.

CIBC World Markets is advising Inmet and Torys LLP is its legal counsel. Scotiabank is financial adviser and Osler, Hoskin & Harcourt LLP is legal counsel to the special committee of the Inmet board evaluating the First Quantum offer.

First Quantum, of Vancouver, is taking financial advice from Jefferies International Ltd.'s Paul Bacchus, Goldman, Sachs & Co. and RBC Capital Markets LLC.

Tags: CIBC World Markets | Cobre Panama | David R. Beatty | First Quantum Minerals Ltd. | Goldman Sachs & Co. | Inmet Mining Corp. | Jefferies International Ltd. | Leucadia National Corp. | Osler Hoskin & Harcourt LLP | poison pill | RBC Capital Markets LLC | Scotiabank | Torys LLP

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