BHP’s Dia Met offer okayed, merger date set

Australia-based BHP‘s (BHP-N) $687-million offer for some 32.7 million outstanding shares of Dia Met Minerals (DMM-T) has been approved by the Belgian competition authorities.

The approval clears the way for BHP to up its stake in the highly profitable Ekati diamond mine, 300 km northeast of Yellowknife. The company is the mine’s operator and already has a 51% interest. Dia Met has a 29% stake. The remaining 20% is split between geologists Charles Fipke and Stewart Blusson.

Ekati, which entered production in October 1998, was Canada’s first diamond mine.

BHP has offered $21 in cash for each of Dia Met’s outstanding shares, including the Class A subordinate shares and Class B multiple voting shares. The offer represents a 23% premium over the closing market price of the Class A shares and a 15% premium over the Class B share price on the day before Oct. 17, 2000, when Dia Met placed itself up for sale.

Two major shareholders, Marlene Fipke and David Mackenzie, who together own 20% of the Class A shares and 39% of the Class B shares, have already agreed to tender their shares to the BHP offer.

Dia Met’s board of directors has unanimously concluded that the offer is in the best interests of shareholders. Financial advisor Credit Suisse First Boston considers it fair. The takeover bid values the company at about 14 times its earnings.

Under the offer, the deposit period expires June 20.

In other news, BHP and London-based Billiton expect their proposed merger to take effect on June 29.

The merger is to occur under a “dual-listed” structure, meaning that both companies will retain their existing public listings but combine their management teams and finances. BHP-Billiton would effectively have about 6 billion shares outstanding and a market capitalization of US$28 billion, making it one of the world’s largest diversified resource companies.

BHP says the record date for the issue of BHP-Billiton bonus shares to eligible BHP shareholders is expected to be July 5. Each eligible BHP shareholder will receive 1.0651 BHP-Billiton shares for every BHP share held.

The issuance of bonus shares is designed to even out the economic and voting rights between BHP and Billiton shareholders. The issuance of shares to eligible BHP shareholders will occur within 10 business days after the record date.

The last day that BHP shares will trade on a cum bonus share basis will be June 28. Shares purchased after that date will not be eligible for the bonus share entitlement.