China’s Sinosteel examining rival offer for Midwest

May 27, 2008

May 27 (AFP) – China’s Sinosteel said on Tuesday it was examining a rival bid for Australian iron ore miner Midwest, arguing its own proposal offered “the certainty of cash in a challenging environment”.

Sinosteel’s 6.38 dollars a share cash offer, valuing Midwest at 1.36 billion dollars (1.31 billion US), was trumped Monday when Murchison Metals made an all-share bid valuing its target at 1.5 billion.

Midwest’s board has unanimously recommended the Murchison bid, while maintaining a recommendation for the Sinosteel offer as it assesses the latest proposal.

Sinosteel distanced itself from remarks made last week by William Ren, the deputy director of its Australian arm, saying the Chinese state-owned entity would not increase its bid.

Sinosteel said in a statement that Ren was “not an official spokesman for the bid”, adding that it would review the Murchison proposal carefully before releasing its response.

“Sinosteel reserves its rights and will consider all options in its response,” it said.

Sinosteel already owns almost 20 percent of Midwest shares and has a small stake in Murchison.

Both Midwest and Murchison own iron ore projects in Western Australia which require rail and port infrastructure for their potential to be realised.

Murchison shares were down 22 cents or five percent at 4.49 dollars in mid-afternoon trade, while Midwest was up two cents or 0.3 percent at 7.07.

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