SteelOrbis Shanghai
Chinese steelmaking giant Sinosteel has been unsettled by the stock-for-stock purchasing method adopted by Murchison Metals in the latter's "reverse takeover" of fellow Western Australian iron ore miner Midwest Corp. Yesterday, Sinosteel announced that its latest offer was its final one, and was unlikely to be hiked.
On May 26, Murchison proposed a stock-for-stock purchase after Midwest turned down its cash purchase plan. Murchison has decided to exchange stocks at the rate of 1:0.575 with Midwest. As a result, Midwest's total share value has reached AU1.65 billion (approximately US$1.6 billion), i.e. AU$7.36 per share.
Sinosteel's first cash offer was rejected by Midwest's board as being too low. Sinosteel then upped its offer to AU$6.38 per share, resulting in a total purchase offer of AU$1.4 billion (approximately US$9.218 per share). Sinosteel also said it would extend the expiry date of the offer to June 13, from June 5.
Sinosteel chairman Huang Tianwen said that Midwest's stockholders should be aware of the uncertainty of Murchison's reverse merger bid and of the details involved. In comparison, he said, Sinosteel's cash purchase plan would be more acceptable and attractive.
Commenting on their own cash offer, the Sinosteel chairman said,"It's already our final offer. After a serious deliberation, we have decided that this is the highest price we can offer. For the stockholders of Midwest, this price is an attractive one which has reflected their value and is in line with the constant value estimation on Midwest by Sinosteel."