UPDATE 2-China firm makes $850 mln bid for Australia's Discovery Metals

Mon Oct 22, 2012 11:22pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* To go directly to shareholders; needs minimum 51 pct acceptance

* Has agreed funding with China Development Bank

* Has gained China regulatory clearance

* Discovery shares up more than 6 pct, trade above offer value

By Narayanan Somasundaram and Sonali Paul

SYDNEY, Oct 23 (Reuters) - A private equity firm founded by Chinese billionaire Yu Yong has gone hostile with its A$824 million ($850 million) takeover bid for Australia's Discovery Metals Ltd after the copper miner's board rebuffed a similar offer earlier this month.

Discovery's shares jumped more than 6 percent to slightly more than the offer price, indicating investors may hold out for a higher offer from CF Investments, which is 75 percent owned by Yu's Cathay Fortune Corp and 25 percent by China-Africa Development Fund.

The decision to go hostile after Discovery's surprise rejection of an initial bid has bolstered expectations that resource-hungry Chinese firms will seek more acquisitions in the sector, especially among companies that have promising projects in emerging markets.

"What the major institutional shareholders will or should do is go back to these guys and say: 'Give us an extra 10 percent and you can have it,' and that's what I think the current market price is reflecting," said Pieter Bruinstroop, an analyst at broker Octa Phillip.   Continued...