November 7, 2013 / 8:19 AM / 5 years ago

Canada's Teck exits Fortescue Metals: source

KUALA LUMPUR (Reuters) - Canada’s Teck Resources Ltd has sold its stake in Fortescue Metals Group Ltd for A$503 million ($479 million), cashing in on a doubling in the world no.4 iron ore miner’s value since June, a person familiar with the sale said.

The 3 percent stake is being sold down through a book-build underwritten and run by CIMB, according to a term sheet seen by Reuters.

Vancouver-based Teck, a large copper, zinc and metallurgical coal miner, has long said it wanted to expand into iron ore, and speculation mounted last year it might bid for Fortescue after accumulating a small stake in the miner in early 2012.

However Teck bid earlier this year for Rio Tinto’s 59 percent stake in Iron Ore Company of Canada (IOC), which Rio wants to sell for $3.5 to $4 billion. It was among two remaining bidders, sources said in August.

Teck is set to book a small profit on its stake, as it started buying into Fortescue when the shares were below A$5.

The offer price on the book-build for the 91,452,228 shares was A$5.50, a 3.5 percent discount to Fortescue’s closing price at A$5.70.

The stock hit an 18-month high on Thursday of A$5.875, buoyed by iron ore prices that have held up much better than expected this year, allowing the miner to start paring its $9.3 billion in net debt.

The book-build closes at 0715 GMT (2:15 EDT).

Fortescue declined to comment on which shareholder was selling the stock. Its founder and chairman Andrew “Twiggy” Forrest is the biggest shareholder with a 33 percent stake.

Additional reporting by Sonali Paul in Melbourne; Editing by Richard Pullin and Matt Driskill

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