In play since mid-June,
Minmetals’ preliminary plan is to acquire, for mostly cash, all of Noranda’s shares at “a small premium to the recent trading level of Noranda’s common shares.” The Canadian miner’s market value rings in at about $6.6 billion, based on its closing price of $22.14 per share in Toronto on Sept. 24, the day of the deal’s announcement. Minmetals would also inherit Noranda’s long-term debt of just under US$3 billion.
The non-binding proposal would also see Noranda’s aluminum division spun off as a separate enterprise in a distribution to shareholders.
Noranda has granted Minmetals an exclusive period to complete due diligence investigations and compose a definitive agreement. Neither company specified the length of the exclusivity period, and Noranda may have to pay a break fee if Minmetals does not ultimately buy. That break fee has prompted many market-watchers to speculate that competitors may be circling; others figure that the 3-month review process has weeded out poseurs.
Many are also suggesting that with Noranda swallowed, it would only be a matter of time, and perhaps an easing of metal prices, before Minmetals would move to consolidate ownership of
In mid-June, Noranda said it had established a special committee of directors to review “several expressions of interest in the company from potential acquirors.”
Early on, Brazil’s
Minmetals’ proposal is subject to government approval, due diligence, a definitive agreement and financing. If completed, the deal would represent one of the largest in Canada’s mining history and the biggest investment in Canada by a Chinese company.
Minmetals, formerly China National Metals & Minerals Import & Export Corp., is a major metals trader, which turned over about US$11.7 billion in revenue in 2003. It is listed on the Shanghai Stock Exchange but is directly controlled by the Communist Party of China’s Working Committee for Large Enterprises. The agency already has an established relationship with Polish copper producer KGHM Polska Miedz for 50,000 tonnes of copper cathode annually.
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