We have discussed yesterday Lukas Lundin and his companies, which could be affected by this bid. We have a nice 26% premium to the Friday's closing already, but we will be very surprised if Lukas Lundin will let this company slip out of his hands for anything less than CAD10.0 per share.
Now speculation will begin this week whether he will be able to defend the company and stay with Inmet together. The obvious choice will be to change the Inmet merger arrangements and provide some premium to Lundin Mining shareholders - more than Equnox is offering. Can the new suitor materialize as well - we will see it shortly. Freeport McMoRan can step in and consolidate Tenke Fungurume stake, but so far this company was not in a hurry. Equnox bid can change the situation as Lundin Mining team was developing the Tenke Fungurume project in Congo and there is no any benefit for FCX to lose the stake in Tenke Fungurume to another company.
We will be watching Canada Zinc Metals today and NGeX Resources. We have covered CZX.v yesterday and NGeX is the Global Exploration Company of Lukas Lundin - should he decide to sell Lundin Mining at one point this company can get more of his capital and attention.
"Equinox to offer $4.8-billion for Lundin takeover
Ticker Symbol: C:EQN C:LUN
Equinox to offer $4.8-billion for Lundin takeover
Equinox Minerals Ltd (C:EQN)
Shares Issued 877,042,919
Last Close 2/25/2011 $6.27
Sunday February 27 2011 - News Release
Also Lundin Mining Corp (C:LUN) News Release
Mr. Craig Williams of Equinox reports
EQUINOX ANNOUNCES TAKEOVER OFFER FOR LUNDIN
Equinox Minerals Ltd. will make an offer to acquire Lundin Mining Corp. for approximately $4.8-billion in cash and shares.
Under the terms of the Offer, Equinox proposes to acquire all of the outstanding common shares of Lundin for a combination of cash and Equinox shares for a total consideration value of C$8.10 per Lundin share. Each Lundin shareholder can elect to receive consideration per Lundin share of either C$8.10 in cash or 1.290
3 Equinox shares plus $0.01 for each Lundin share, subject to a pro-ration based on a maximum cash consideration of approximately C$2.4 billion and maximum number of Equinox shares issued of approximately 380 million. The Offer reflects a 26% premium to the closing price of C$6.45 per Lundin share on the TSX on February 25, 2011.
The Offer is consistent with Equinox's strategy of becoming the leading global pure copper growth company. Equinox believes that the combination of Equinox's and Lundin's world-class asset portfolios will position the combined company to deliver significant value to its shareholders through its superior leverage to near-term strength in copper prices and strong growth profile. The combined group will have an outstanding production growth profile relative to the global copper sector, with a targeted 23% compound annual growth rate in production over the next six years, culminating in planned production of approximately 500,000 tonnes of copper per annum by 2016. Growth would be delivered entirely from lower risk expansions of existing operations and a project currently under construction.
The combination of Equinox and Lundin will also deliver a significantly higher copper production profile over the next six years compared to the profile of a combined Lundin and Inmet Mining Corporation ("Inmet"), delivering approximately 500,000 tonnes of incremental copper over this period. This allows shareholders of both companies to increase their leverage to the anticipated near term strength in copper prices.
Equinox President and Chief Executive Officer, Craig Williams, said "This Offer is clearly superior to the nil-premium merger proposed between Lundin and Inmet. We also believe that our Offer presents an attractive option for Lundin shareholders to elect to receive cash or retain exposure to what we believe would be one of the strongest and lowest risk production and growth profiles in the copper sector today."
Highlights of the transaction
A fully funded C$4.8 billion cash and share Offer for Lundin that demonstrates Equinox's capability to identify and pursue opportunities that deliver on our goal of becoming the leading global pure copper company.
The Offer reflects a 26% premium over the closing price for Lundin shares on February 25, 2011, and therefore represents a clearly superior offer for Lundin shareholders than the recommended Lundin and Inmet nil-premium merger.
Shareholders of both companies benefit from superior leverage to the near-term copper price cycle.
Cements Equinox's position as a leading global pure copper company with a diversified portfolio of world class assets and an outstanding growth pipeline.
The transaction will be immediately accretive for Equinox shareholders on a cash flow and earnings per share basis.
Equinox Chairman, Peter Tomsett, said "The Offer which seeks to combine the world class assets of the two companies demonstrates Equinox's capability to identify and pursue opportunities that present a strong strategic fit with our goal to become the world's leading pure play copper company."
Having taken Lumwana from an exploration project to one of the world's most significant new copper mines over the last 10 years and having successfully acquired the Citadel Resource Group, Equinox strives to continue to deliver shareholder value by building a portfolio of quality assets with embedded growth.
Equinox President and Chief Executive Officer, Craig Williams, said "The combination of the assets of Equinox and Lundin will constitute one of the most attractive and highest quality asset portfolios in the copper sector. The combination of those assets plus the significant near term expansion potential within the portfolio and the highly prospective exploration upside in the world's key emerging copper regions constitutes a combined company that will be one of the world's premier copper companies".
The combined company will consist of five substantial producing operations by mid 2012, providing significant geographic and copper production diversity. Equinox operates the Lumwana mine in Zambia (100%) and is currently constructing the Jabal Sayid project in Saudi Arabia (100%). Lundin's assets include the Tenke Fungurume copper mine (24%) in the Democratic Republic of the Congo, Neves-Corvo in Portugal (100%) and Zinkgruvan in Sweden (100%).
Equinox strongly believes that the Offer will be very attractive to Lundin shareholders and clearly preferable to a nil-premium merger which carries increased development and financing risk. Accordingly, the Equinox board determined to announce the Offer to enable Lundin's shareholders to consider this highly attractive alternative prior to the proposed shareholder vote on the nil-premium merger with Inmet scheduled for March 14, 2011.
Funding
The cash consideration of Equinox's Offer is financed through a US$3.2 billion bridge facility being led by Goldman Sachs Lending Partners and Credit Suisse Securities. Equinox expects the financial strength of the combined company to allow it to return to a net cash position within four years based on current analyst consensus copper price forecasts.
Equinox intends to refinance the bridge facility through a combination of medium and long term debt instruments. Equinox has no plans to undertake an equity raising as part of the refinancing of the bridge.
The Offer
Full details of the Offer will be included in the formal offer and take-over bid circular to be mailed to Lundin shareholders. Equinox expects to formally commence the Offer and mail the offer and circular to shareholders in the coming days.
The Offer will be subject to certain conditions including, without limitation, termination of the existing Lundin-Inmet Arrangement Agreement in accordance with its terms, and a simple majority approval of Equinox shareholders of the issuance of the Equinox shares to be issued under the Offer at a meeting of Equinox shareholders that Equinox expects to occur in early to mid April. Other conditions will include acceptance of the Offer by Lundin shareholders owning not less than two-thirds of Lundin's shares outstanding on a fully-diluted basis, and receipt of applicable regulatory approvals, and other customary unsolicited offer conditions.
Advisors and counsel
Goldman, Sachs & Co. is acting as lead financial advisor to Equinox and TD Securities Inc. is acting as joint financial advisor to Equinox. Equinox's legal counsel is Osler, Hoskin & Harcourt LLP.
North American/European Investment market call and webcast
Equinox will host an analyst and investor conference call and webcast on February 28, 2011 at 10:00am Canadian/US Eastern Standard Time, 3:00pm London Time and 4:00pm Stockholm Time.
Australian/Asian Investment market call and webcast
Equinox will host an analyst and investor conference call and webcast on March 1, 2011 at 9:30am Australian Eastern Daylight Savings Time and 6:30am Perth and Hong Kong Time.
For dial in details please see Appendix A to this announcement.
We seek Safe Harbor.
© 2011 Canjex Publishing Ltd."
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