China Minmetals in final talks to buy Noranda

Chinese parastatal enterprise China Minmetals has emerged as the favoured bidder for Noranda (NRD-T) after a three-month show-and-tell by parent Brascan (BNN-T).

Minmetals is proposing to acquire 100% of Noranda for “a small premium” to market value, $6.6 billion at the close of trading on Sept. 24. The offer is principally cash. Shares in Noranda had closed at $22.14 on the day of the announcement, down 46 from the previous day’s close.

Noranda has granted Minmetals an exclusive period to complete due-diligence investigations and to formulate a definitive agreement. Neither company specified the length of the period of exclusivity, and agreement is not yet final. Noranda may have to pay a break fee if Minmetals does not ultimately buy.

The agreement would probably see Noranda’s aluminum division spun off as a separate enterprise in a distribution to shareholders. Minmetals is mainly interested in Noranda and in the company’s 59% shareholding in Falconbridge (FL-T).

Minmetals, formerly China National Metals &Minerals Import & Export Corporation, 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 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.

Note to readers: the author of the article (J.B.W.) is a beneficial holder of Noranda shares.