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Northern Iron gets new takeover proposal

by Laura Board  |  Published July 30, 2012 at 8:43 AM
NorthernIron_227x128.jpgA bidding war loomed for Australian miner Northern Iron Ltd. after Switzerland's Prominvest AG trumped India's Aditya Birla Management Corp. Pvt. Ltd. with a conditional takeover proposal worth about A$610.8 million ($641.1 million) including debt.

West Perth-based Northern Iron said Prominvest on Friday offered A$1.42 per share, or about A$525 million for all the equity, in what it described as a "highly conditional, indicative, nonbinding stage one proposal"

The target said the offer was conditional on exclusive due diligence access, which it refused, though it offered to open its books to the new suitor if Prominvest dropped its exclusivity request.

It announced the approach as it offered detailed due diligence access to Aditya Birla after the Indian company on July 24 sweetened its proposal to A$1.40 per share from between $1.28 and $1.35 per share. Northern Iron's due diligence offer is subject to it reaching an agreement with Aditya Birla about the process.

"Subject to one or both of Aditya Birla Group and Prominvest participating in the due diligence process NFE (Northern Iron) will engage with each relevant party to determine whether a binding proposal can be agreed that is capable of being put to NFE shareholders with the recommendation of the NFE board," it said, promising that equal treatment of the two suitors would be its "guiding principle."

Northern Iron effectively put itself on the block in November when it announced that Goldman, Sachs & Co. would conduct a strategic review of ownership options. Its only asset is the nascent Sydvaranger iron ore project in northern Norway, which by the end of 2012 will have the capacity to produce 2.8 million tons a year. The company, led by managing director and CEO John Sanderson, made its first profit, of $2.9 million, in 2011, when its revenue was $193.8 million . It has net debt of about $90 million.

Mumbai-based Aditya Birla is a conglomerate with interests including metals, cement, clothes and financial services. The acquisition of Northern Iron would be the group's first iron-mining venture.

Northern Iron described Prominvest as a Swiss trading company. It wasn't clear whether it is linked to Ukrainian bank Prominvestbank, or to any other of several other eastern European and Russian entities that bear the Prominvest name.

Prominvest's takeover proposal is valid for 30 days from July 27, unless Prominvest elects to extend it.

Northern Iron shares Monday closed up almost 11% at A$1.15.

Aditya Birla is taking financial advice from Investec plc.

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Tags: Aditya Birla Management Corp. Pvt. Ltd. | M&A. India | Northern Iron Ltd. | Prominvest AG

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