Equinox Minerals offers C$4.8 billion for Lundin Mining
Equinox Minerals Limited (TSX and ASX: EQN) says it will make an offer to acquire Lundin Mining Corporation for approximately C$4.8 billion in cash and shares.
Equinox proposes to acquire all of the outstanding common shares of Lundin for a combination of cash and Equinox shares for a total consideration value of C$8.10 per Lundin share.
Each Lundin shareholder can elect to receive consideration per Lundin share of either C$8.10 in cash or 1.2903 Equinox shares plus $0.01 for each Lundin share, subject to a pro-ration based on a maximum cash consideration of approximately C$2.4 billion and maximum number of Equinox shares issued of approximately 380 million. The offer reflects a 26 per cent premium to the closing price of C$6.45 per Lundin share on the TSX on February 25, 2011.
The offer is consistent with Equinox’s strategy of becoming the leading global pure copper growth company. Equinox believes that the combination of Equinox’s and Lundin’s world-class asset portfolios will position the combined company to deliver significant value to its shareholders through its superior leverage to near-term strength in copper prices and strong growth profile.
The combined group will have an outstanding production growth profile relative to the global copper sector, with a targeted 23 per cent compound annual growth rate in production over the next six years, culminating in planned production of approximately 500,000 tonnes of copper per annum by 2016. Growth would be delivered entirely from lower risk expansions of existing operations and a project currently under construction.
The combination of Equinox and Lundin will also deliver a significantly higher copper production profile over the next six years compared to the profile of a combined Lundin and Inmet Mining Corporation (“Inmet”), delivering approximately 500,000 tonnes of incremental copper over this period. This allows shareholders of both companies to increase their leverage to the anticipated near term strength in copper prices.
Equinox President and Chief Executive Officer, Craig Williams, said “This Offer is clearly superior to the nil-premium merger proposed between Lundin and Inmet. We also believe that our Offer presents an attractive option for Lundin shareholders to elect to receive cash or retain exposure to what we believe would be one of the strongest and lowest risk production and growth profiles in the copper sector today.”
Goldman, Sachs & Co. is acting as lead financial advisor to Equinox and TD Securities Inc. is acting as joint financial advisor to Equinox. Equinox’s legal counsel is Osler, Hoskin & Harcourt LLP.