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TORONTO, April 5 (Reuters) - China’s Minmetals Resources (1208.HK) C$6.3 billion bid for Equinox Mineral EQN.TO is the perfect test case for state-controlled Chinese entities looking to acquire overseas mining assets, Canadian bankers told the Reuters Global Mergers and Acquisitions Summit on Tuesday.
Equinox, target of an unsolicited offer from Chinese metals trader Minmetals, is a Canadian company with listings in both Canada and Australia. While the majority of its board is based in Canada, Equinox’s chief executive is based in Australia and its assets are spread across Africa and the Middle East.
“I don’t think they could have picked a better target, or timing to try a hostile bid and see what the reaction is,” said John Tuer, managing director for mergers and acquisitions at Scotia Capital, while speaking at the Toronto-leg of the Reuters Summit.
Tuer noted the very fact that Equinox itself is entangled in a hostile battle to acquire rival Lundin Mining (LUN.TO) also bodes well for Minmetals.
“As a test case for them, it’s about as good a fact-set as you could have,” he said.
State-controlled Chinese entities have for the most part focused on joint-ventures, resource off-take agreements and minority stakes in foreign mining companies, as they attempt to sate China’s growing appetite for metals and other commodities.
“Given the fact that the great majority of the assets and operations are abroad. It is less likely to be a controversial issue than lots of other potential targets,” said Andre Hidi, who heads the global mergers and acquisitions group at BMO Capital Markets, the investment banking arm of the Bank of Montreal(BMO.TO).
For top stories from the Reuters Global Mergers and Acquisitions Summit, see [ID:nN01283917] Reporting by Euan Rocha; editing by Gunna Dickson