Shares of LionOre Mining International Ltd. rose in Australia after the company said a C$5.3 billion ($4.8 billion) offer from Russia's OAO GMK Norilsk Nickel is superior to an earlier bid it accepted from Xstrata Plc.
Xstrata's agreement allows it to increase its offer by May 14, Toronto-based LionOre said yesterday in a statement. Norilsk's May 3 cash offer of C$21.50 a share is 16 percent more than the C$18.50 bid Xstrata made March 26.
A five-year rally in metal prices has sparked 473 deals or bids in the industry this year, valued at $55.4 billion, according to data compiled by Bloomberg. LionOre, which expects to produce 44,300 tons of nickel this year, is being pursued for mines in Australia and Africa as nickel rises to a record.
``With Xstrata they've had a history of being dogged when they want something, they don't like missing out,'' said Melbourne-based Intersuisse Ltd. analyst Peter Arden, who says both companies can afford to pay more for LionOre. ``It might only be a small increase but there might be six tiny increases before we get to the final price.''
LionOre's shares rose as much as 34 cents, or 1.3 percent, to A$26.38 on the Australian Stock Exchange and traded at A$26.23 at 2:01 p.m. in Sydney. The stock rose 19 cents, or 0.8 percent, to C$24.04 in Toronto yesterday.
Norilsk, Xstrata
Vladimir Potanin, who plans to buy a stake from fellow Russian billionaire Mikhail Prokhorov to become Moscow-based Norilsk's largest shareholder, would keep Norilsk's production ahead of Brazilian rival Cia. Vale do Rio Doce.
Buying LionOre would help Xstrata Chief Executive Officer Mick Davis in his drive to make the company one of the world's three largest nickel producers.
Ore from LionOre's two mines in Botswana and South Africa is processed at Xstrata's Nikkelverk refinery in Norway. LionOre also operates three nickel mines and one gold mine in Australia and owns the undeveloped Honeymoon Well nickel deposit in Western Australia.
Zug, Switzerland-based Xstrata's offer is due to close on May 25 and carries a breakup fee of C$131 million. It also has the right to match any superior offer. Xstrata said in March it had secured an irrevocable ``lock-up'' arrangement with shareholders including directors for 19 percent of the company.
Source :www.bloomberg.com
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