UPDATE 1-Shareholders back miner Augusta's takeover defense

Fri May 2, 2014 4:08pm EDT
 
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(Adds background on offer, market reaction, detail on when regulators may rule on poison pill.)

May 2 (Reuters) - Augusta Resource Corp shareholders have voted to keep the company's shareholder rights plan in place, the miner said on Friday, a setback for HudBay Minerals Inc's hostile bid for the company.

Shareholder rights plans, often called poison pills, are designed to make hostile takeovers difficult. Shareholders could have cleared the way for a Hudbay takeover by voting against the poison pill, but instead they backed it by a wide margin.

Excluding Hudbay's own votes, Augusta said, 94 percent of votes were in favor of the rights plan.

Hudbay has asked the British Columbia Securities Commission to cease trade of the poison pill, which would render it ineffective despite the vote. Augusta said it expects a ruling to come from the regulator on Friday afternoon.

Hudbay wants control of Augusta's Rosemont project in Arizona, widely seen as one of the most promising copper projects in the United States.

Under the offer, which expires on Monday, investors would get 0.315 of a Hudbay common share, worth C$3.04 on Friday afternoon, for each share of Augusta. Augusta has called the bid "grossly inadequate."

Shares of Augusta were down 5.4 percent at C$3.00 on the Toronto Stock Exchange on Friday afternoon. (Reporting by Allison Martell; Editing by Meredith Mazzilli, Bernard Orr)