February 24, 2012 / 4:18 PM / 6 years ago

Fibrek shares slip as higher Mercer bid hits block

(Reuters) - Shares of Fibrek FBK.TO fell 8 percent on Friday, after Quebec regulators blocked a private placement by the pulp producer to friendly suitor Mercer International MRIu.TO, boosting chances that AbitibiBowater’s ABH.TO hostile lower bid may succeed.

“This ruling makes it significantly more difficult for Mercer to gain control of Fibrek, given Resolute’s hard lock-up of 46 percent of Fibrek’s shareholder base,” RBC Capital Market’s analyst Paul Quinn said in a note late Thursday.

AbitibiBowater, which operates under the name Resolute Forest Products, has 51.5 percent of Fibrek shares tendered under its offer. AbitibiBowater has extended its C$130 million offer, which is 30 percent lower than Mercer’s, till March 9.

Mercer has offered C$170 million and has also agreed to buy 32.3 million special warrants from Fibrek for C$1.00 each. This has been blocked by the provincial tribunal of Quebec.

“Mercer’s management was creative in its first bid, so we would not rule them out at this time,” Quinn said.

AbitibiBowater and Mercer are competing to get access to Fibrek’s three mills with a combined annual production capacity of 760,000 tonnes.

Shares of Fibrek were trading down 5 percent at C$1.23, below Mercer’s offer price of C$1.30 a share, on the Toronto Stock Exchange. They had earlier touched a low of C$1.19.

Reporting by Aftab Ahmed in Bangalore; Editing by Sriraj Kalluvila

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