Inmet battle goes hostile, investors hope for more

Mon Dec 17, 2012 4:57pm EST
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By Julie Gordon and Clara Ferreira-Marques

TORONTO/LONDON (Reuters) - Shares of Inmet Mining Corp IMN.TO jumped Monday after First Quantum Minerals Ltd sweetened its offer for its Canadian rival to C$5.1 billion ($5.2 billion) and said it was taking the deal directly to shareholders in a bid to control one of the world's largest untapped copper deposits.

The C$72-a-share cash and paper offer, announced by First Quantum on Sunday, tops its earlier bids of C$62.50 and C$70, both rejected by Inmet's board.

The now-hostile offer sent shares of Toronto-based Inmet up more than 5 percent on Monday to as high as C$74 as investors bet that Vancouver-based First Quantum would sweeten its offer once again.

Analysts said the company might up the ante to secure the blessing of Inmet's board and gain access to the books on its giant Cobre Panama project in Central America.

"Given the highly concentrated nature of Inmet's shareholder base ... we believe that a markedly higher offer, likely in the range of C$80.00-90.00 per share, would be required to motivate Inmet shareholders to accept First Quantum's unsolicited offer," Canaccord Genuity analyst Orest Wowkodaw said in a note.

Inmet said on Monday it had not yet received the formal offer from First Quantum and advised its shareholders to take no action. Nearly 40 percent of the company is held by only four shareholders, including holding company Leucadia National Corp (LUK.N: Quote) and a subsidiary of Temasek Holdings Pvt LtdTEM.UL, the Singapore sovereign wealth fund.

First Quantum's initial bid last month caught investors by surprise, raising their concerns about the miner's strategy and stirring speculation that First Quantum itself was facing a takeover attempt. First Quantum has made its name developing projects in Africa at a lower-than-average cost, while estimated costs to develop Cobre Panama are among the world's highest.

Speaking publicly for the first time since First Quantum announced the first offer, executives told shareholders on Monday the company was not changing its tactics.   Continued...