Murchison Metals Doubles Its Stake in Sinosteel Target Midwest

May 26, 2008

May 26 (Bloomberg) – Murchison Metals Ltd., an Australian iron ore producer backed by Posco, paid A$70.8 million ($68 million) to double its stake in rival Midwest Corp. and had its own shares halted pending a statement on a possible transaction.

Murchison, also a venture partner with Japan’s Mitsubishi Corp., bought 11.1 million shares at A$6.38 each to boost its stake in Midwest to 9.98 percent, the Perth-based company said today in a statement. It dropped a hostile all-share offer for Midwest in February after being outbid by China’s Sinosteel Corp.

Chinese companies are snapping up mining assets in Australia to ensure supplies for the world’s fastest-growing major economy. Midwest, whose shares are also halted, and Murchison are competing to build a port and rail to ship ore to Japan and China.

Perth-based Midwest gained 2 cents, or 0.3 percent, to A$6.25 on May 23, 13 cents short of the agreed A$6.38 cash offer from Sinosteel that values the company at A$1.36 billion ($1.3 billion.) Murchison fell 1.5 percent to A$4.04 on May 23, its last day of trading.

Acquisitions of coal and iron-ore assets in Australia, the world’s largest exporter of the raw materials, will rise as steelmakers try to reduce costs, UBS AG said in a May 21 report.

Churchill Capital Ltd. arranged the purchase, Murchison said. Sinosteel owns a 19.9 percent stake in Midwest and also holds a 2.4 percent stake in Murchison. Harbinger Capital Partners own a 18.76 percent stake in Murchison, according to Bloomberg data.


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