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Xstrata wins $3.2bn MIM prize
CNN's Geoff Hiscock in Sydney
(CNN) -- Anglo-Swiss miner Xstrata has won shareholder approval for its protracted Aust. $4.9 billion ($3.2 billion) takeover bid for Australian mining house MIM Holdings. Shareholders voted 89 percent in favor of the deal Friday in Brisbane, the Australian city where MIM has its headquarters. Assuming no hitch in regulatory approvals, the takeover will add A$3.5 billion ($2.3 billion) a year in sales to Xstrata, moving it into the big league of global resources groups. MIM is one of the world's biggest coal exporters and said last year it aimed to double annual coal output to 38 million tonnes over the ensuing five years. To succeed with its offer, Xstrata needed 75 percent of shares voted and 50 percent of shareholder support by numbers. The final outcome, released late on Friday to the Australian Stock Exchange, showed 89.1 percent support by shares and 58.5 percent support by shareholder numbers. The controversial bid was opposed by some key shareholders and MIM managing director Vince Gauci, who fell out with his board over Xstrata's approach. While MIM chairman Leo Tutt and the six non-executive directors recommended shareholders take Xstrata's offer of A$1.72 a share, Gauci termed the bid an "opportunistic" one that did not reflect the company's value. He repeated that assertion in a final address to shareholders on Friday morning, but the mood was against him. Gauci maintained that MIM's restructure, under which it sold off its European zinc smelters and closed its currency hedging positions, would deliver benefits as commodity markets begin to pick up. But Xstrata stressed that shareholders were unlikely to see a better offer than A$1.72. Market watchers predicted MIM shares would fall as low as A$1.30 if the bid was rejected. The shares traded at A$1.25 in November just before news emerged that Xstrata, which is listed in London and Zurich, was talking to MIM. MIM shares closed at A$1.65 Thursday, ahead of a trading halt Friday morning. Xstrata looked at MIM for more than a year. In November last year it confirmed it was in talks about a possible takeover, and then in early April launched what was assumed to be a friendly bid. It spent heavily on an advertising campaign in the Australian media, urging MIM shareholders to accept the offer as one which offered financial certainty. As well as being a major exporter of Australian coking and thermal coal, MIM also produces copper, silver, zinc and lead at its original Mount Isa underground mine in northwestern Queensland. It holds 50 percent of the Alumbrera copper and gold mine in Argentina. Xstrata, which has coal and zinc interests in South Africa and Australia, is held 40 percent by the Swiss trading house Glencore International. Its other big shareholder is the Capital Group Companies Inc, with 15.27 percent. The acquisition reduces the earnings contribution made by Xstrata's African operations, where it is the No. 3 coal miner and also a producer of chrome and vanadium. Xstrata offered to pay A$3.44 billion in cash for MIM and assume debt of about A$1.5 billion for a total of A$4.94 billion.
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