First Quantum mails hostile offer to Inmet shareholders

9th January 2013 By: Henry Lazenby - Creamer Media Deputy Editor: North America

TORONTO (miningweekly.com) – Canadian base-metals miner First Quantum on Wednesday said it has formally mailed a C$5.1-billion takeover bid circular and related documents to Inmet Mining shareholders in an attempt to gain control of the smaller company’s significant Cobre Panama copper/gold project, in Panama.

Under terms of the takeover, first outlined in December, Inmet shareholders would be paid up to C$72 a share or in First Quantum shares, or a combination of cash and shares.

First Quantum said it intends to create a new industry-leading, globally diversified base metals company with an expected industry-leading growth profile in copper.

"I believe this combination creates a uniquely attractive, large, liquid and high-growth copper-focused company. First Quantum and Inmet are very complementary in terms of their copper focus.

“I see the combination of the two companies creating not only a new global leader in copper, but also one of the most exciting, 'must - own' companies in the global mining sector,” First Quantum CEO Philip Pascall said in a statement.

Despite Inmet’s shares trading at C$72.41 apiece on the TSX on Wednesday, First Quantum believed the offer entailed a 65% premium to Inmet's underlying equity value as of November 23, 2012, the last trading day before First Quantum's submission of its first friendly proposal to Inmet's board.

First Quantum in October also put forward a bid of C$62.50, and in November raised it to C$70 a share.

First Quantum also said the offer represented a 35% premium to the 30-day volume-weighted average price and 33% to the closing share price of the Inmet shares on the TSX on November 23, 2012.

Inmet responded to the offer, saying it would “carefully evaluate the terms of First Quantum's unsolicited bid”.

However, the company added it was undertaking a process to investigate all potential strategic alternatives that may enhance shareholder value, some of which predate the First Quantum offer.

Inmet said it would file a director’s circular containing its formal recommendation to Inmet shareholders within 15 days.

First Quantum’s offer expires on February 14, unless extended or withdrawn and needs no less than 66.66% of Inmet's outstanding shares on a fully diluted basis, as well as necessary regulatory approvals, to proceed.

First Quantum is being advised on the deal by Jefferies International, Goldman Sachs and RBC Capital Markets, while Inmet is being advised by CIBC World Markets.

First Quantum’s shares traded 3.4% down at C$20.80 apiece on Wednesday afternoon.