Xstrata bid boosts MIM trade

MIM has been mining at Mount Isa for more than 80 years. Story Tools

SYDNEY, Australia (CNN) -- Takeover target MIM has topped the volume on the Australian Stock Exchange Tuesday, a day after Swiss-based Xstrata announced a friendly bid valued at about $3 billion.

MIM, one of the best-known names in Australian mining, closed 5 percent higher at A$1.68, on turnover of more than 106 million shares, about five times its normal volume.

Its closing price compares to the offer of A$1.72 a share from Xstrata, which is listed in London and Zurich.

While the MIM board said on Monday the offer was in the best interests of shareholders, it has been opposed by MIM managing director Vince Gauci.

The board said Gauci "considers that the proposal does not adequately reflect the value of the company."

His reasons will be spelt out in more detail in an information memorandum MIM expects to issue in late April.

MIM is one of the world's biggest coal exporters, and also produces copper, zinc and lead at its original Mount Isa mine in northwestern Queensland. It holds 50 percent of the Alumbrera copper and gold mine in Argentina.

Xstrata, which has coal and zinc interests in South Africa and Australia, is held 40 percent by the Swiss trading house Glencore International. Its other big shareholder is the Capital Group Companies Inc, with 15.27 percent.

Analysts say only a handful of other mining companies, including AngloAmerican, Rio Tinto and BHP Billiton, might be interested in MIM, but a genuine rival bid is considered unlikely.

WMC Resources said Tuesday it had looked at MIM previously but was not interested at A$1.72 a share.

Tuesday's closing price of A$1.68 is well above the A$1.20 range that MIM was trading in before it announced the talks with Xstrata on November 21 last year.

Xstrata will pay A$3.44 billion in cash and assume debt of about $A1.5 billion for a total of A$4.94 billion ($2.96 billion).

Ratings agency Standard & Poor's said Tuesday that MIM's ratings were not immediately affected by the Xstrata announcement.

S&P noted that the deal needed the approval of a majority in number of MIM shareholders and at least 75 percent of the total number of shares voted.

The deal is also subject to approvals from the Australian Government and the Supreme Court of Queensland.

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