Exxaro thwarted in Territory bid

[miningmx.com] — EXXARO is reviewing its position after its bid for Australian iron ore miner Territory Resources was trumped on Thursday by Noble Group .

Hong Kong-based Noble, which already owns 30% of Territory, made an unconditional offer of A$132.6m – 9% better than Exxaro’s offer.

“By making this offer to secure our holding in Territory, we aim to ensure that its attention on growth will not in future run the risk of being deflected by any more opportunistic corporate actions,” Noble said.

Territory Resources said the board would meet on Thursday to review the offer and would later provide shareholders with further advice.

During late afternoon trade on the Australian Stock Exchange, Territory’s shares were up 10.6% at A$0.52 per share.

Exxaro launched its offer last month as part of a plan to buy several iron ore assets and eventually produce 10 million tonnes a year of the steel-making ingredient.

Analysts said Exxaro’s bid, pitched at a 64% premium to Territory’s share price at the time, was expensive given the short three- to five-year life span of Territory’s mine in Australia’s Northern Territory.

Analysts said it was unlikely to make a higher bid.

“Investors would be quite happy if Exxaro decided to do no more on this and let Noble have it. It doesn’t necessarily fit their strategy given its location and how little ore there is left in that asset,” said a Johannesburg-based analyst.

“I’d prefer Exxaro spending that same money on some early stage prospect in West Africa where we know there is lots of iron ore … generally something in Africa would seem to be a better investment for them,” another analyst said.

“Exxaro doesn’t have the fire power to compete for some of the exciting existing assets because there is such a demand for those assets at the moment.”

Noble has appointed Investec broker to the offer. Exxaro is being advised by RMB Corporate Finance and Greenhill Caliburn. Azure Capital is advising Territory.