Tue,February7, 2012
Last Thursday, Swiss miner Xstrata and commodities trader Glencore announced a potential blockbuster merger that would shake up a few of mining’s biggest industries.
According to Reuters, the deal is set to total $80 billion. And the newly combined firms “would rank as the world’s largest thermal coal exporter, the largest zinc producer and third-largest copper miner…”
Many analysts are already predicting a jump in the price of coal, copper and zinc in the coming weeks.
But the all-share merger would also disrupt another big mining industry… iron ore. And investors will want to pay close attention.
Iron Ore Equals Big Profits
Over the past 10 years, iron ore has had a run even gold can’t touch.
From August 2001 to August 2011, prices jumped 1,266%. Gold jumped 566% comparably.
Today, about 70% of iron ore traded in the world is accounted for by three companies – BHP Billiton, Vale and Rio Tinto. And they’re raking in massive profits.
Reuters reports, “Iron ore sells for around $140 per tonne to China… and only costs about $20 to $30 per tonne to mine.” China’s steelmakers aren’t very happy about paying such high prices. But since October 2011, they’ve had a little bit of a reprieve.
The “big three” have flooded the market with iron ore supplies, driving the price lower, to around $120.
As mining.com explains, the iron ore’s big players are “concentrating on building market share rather than maximizing prices. This way the giants drive high-cost producers out of the business.”
If Glencore and Xstrata don’t want to get left out in the rain, they should make this merger happen.
And there are two main reasons it’s more likely to happen than not.
Glencore and Xstrata Make Sense
First, Glencore already owns 34% of Xstrata. So both companies already understand the risks and advantages this merger carries. And it should make it that much easier for them to agree on a final price.
Second, Xstrata has been trying to gain a stake in the iron ore industry for years. In 2009, the company attempted to purchase Anglo American (AAUKF.PK). The deal would have made Xstrata the fifth-most-profitable company in the iron ore market. But talks fizzled and the deal fell through.
Now the proposed merger between Glencore and Xstrata has reignited speculation of another takeover attempt coming for Anglo American, the world’s fourth-largest iron ore producer.
A few other companies also stand to be bought up if a deal is reached, as well.
Iron Ore M&A Heating Up
First Quantum Minerals (FQVLF.PK), Fortescue Metals Group (PINK: FSUMF.PK) and Freeport McMoRan Copper & Gold (NYSE: FCX) are also being seen as potential targets.
But Freeport may also be too expensive for Xstrata and Glencore and could end up as more of a competitor than potential takeover.
Only time will tell. But this is one development that should begin unfolding in just the next few weeks.
Disclosure: Investment U expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees and agents of Investment U (and affiliated companies) must wait 24 hours after an initial trade recommendation is published on online - or 72 hours after a direct mail publication is sent - before acting on that recommendation.
(sourced SeekingAlpha.com)
Showing posts with label mergers and acquisitions. Show all posts
Showing posts with label mergers and acquisitions. Show all posts
Tuesday, February 7, 2012
Monday, March 14, 2011
Deals of the day -- mergers and acquisitions
Mon Mar 14, 2011 9:04am GM
March 14 (Reuters) - The following bids, mergers, acquisitions and disposals involving European, U.S. and Asian companies were reported by 0900 GMT on Monday.
** Spanish power utility Iberdrola said it needed 3 billion euros ($4.18 billion) in additional financing for an aquisition in Brazil, buying back its Renovables unit .
** Cellcom Israel has offered to buy its sister company
Netvision for about 1.5 billion shekels ($421 million) in cash, Israel's largest mobile phone operator said.
** U.S. private equity firm Mount Kellett Capital Management along with two Indian firms are close to buying 35 percent in pharma retailer MedPlus Health Services for 4.1 billion rupees ($91 million), the Times of India reported on Monday.
** Japan's Nippon Life Insurance Company is buying a 26 percent stake in India's Reliance Life Insurance for $680 million, the Indian company said in a statement.
** France Telecom and Kuwaiti logistics group Agility are to acquire a 44 percent stake in fast-growing Iraqi mobile operator Korek Telecom, the groups said in a joint statement.
** State-run Steel Authority of India said it is conducting a joint feasibility study with Japan's Kobe Steel for a steel plant and a 1,000 megawatt gas-based power plant in north India.
** Zain approved an offer by Saudi billionaire Prince Alwaleed's Kingdom Holding and Bahrain Telecom (Batelco) for its Saudi assets, paving the way for completion of a $12 billion stake deal with UAE's Etisalat .
** Furniture retailer JD Group said it has agreed to buy Steinhoff's South African retail unit for about 3 billion rand ($436.1 million).
** Care homes operator Southern Cross Healthcare Group said it had walked away from offer talks and was instead looking to its landlords and the government to help tackle its increasingly precarious financial situation.
** British printing company St Ives Plc said it agreed to sell its loss-making magazine business for 20 million pounds ($32.5 million) to a unit of private equity firm Walstead Investments Ltd.
** Spanish oil company Repsol said on Monday private investors have agreed to buy 3.83 percent of its Argentine unit YPF at $42.4 per share.
** Troubled company AssetCo Plc , the largest outsourcing partner to London Fire Brigade, rejected a fresh takeover approach calling it "opportunistic", exactly a month after its short-term funding issues punctured offer talks with a third party.
(Compiled by Krishnakali Sengupta in Bangalore,sourced:Reuters)
** Spanish power utility Iberdrola said it needed 3 billion euros ($4.18 billion) in additional financing for an aquisition in Brazil, buying back its Renovables unit .
** Cellcom Israel has offered to buy its sister company
Netvision for about 1.5 billion shekels ($421 million) in cash, Israel's largest mobile phone operator said.
** U.S. private equity firm Mount Kellett Capital Management along with two Indian firms are close to buying 35 percent in pharma retailer MedPlus Health Services for 4.1 billion rupees ($91 million), the Times of India reported on Monday.
** Japan's Nippon Life Insurance Company is buying a 26 percent stake in India's Reliance Life Insurance for $680 million, the Indian company said in a statement.
** France Telecom and Kuwaiti logistics group Agility are to acquire a 44 percent stake in fast-growing Iraqi mobile operator Korek Telecom, the groups said in a joint statement.
** State-run Steel Authority of India said it is conducting a joint feasibility study with Japan's Kobe Steel for a steel plant and a 1,000 megawatt gas-based power plant in north India.
** Zain approved an offer by Saudi billionaire Prince Alwaleed's Kingdom Holding and Bahrain Telecom (Batelco) for its Saudi assets, paving the way for completion of a $12 billion stake deal with UAE's Etisalat .
** Furniture retailer JD Group said it has agreed to buy Steinhoff's South African retail unit for about 3 billion rand ($436.1 million).
** Care homes operator Southern Cross Healthcare Group said it had walked away from offer talks and was instead looking to its landlords and the government to help tackle its increasingly precarious financial situation.
** British printing company St Ives Plc said it agreed to sell its loss-making magazine business for 20 million pounds ($32.5 million) to a unit of private equity firm Walstead Investments Ltd.
** Spanish oil company Repsol said on Monday private investors have agreed to buy 3.83 percent of its Argentine unit YPF at $42.4 per share.
** Troubled company AssetCo Plc , the largest outsourcing partner to London Fire Brigade, rejected a fresh takeover approach calling it "opportunistic", exactly a month after its short-term funding issues punctured offer talks with a third party.
(Compiled by Krishnakali Sengupta in Bangalore,sourced:Reuters)
Tuesday, March 8, 2011
Antofagasta to pay record special dividend
Tue Mar 8, 2011 4:18pm GMT
* Special dividend for 2010 100 cents, vs 14 cents in 2009
* 2010 earnings/share 106.7 cents, vs 119 cents forecast
* Market fundamentals positive, but volatility to continue
* CEO sees net earnings rising to $1.5 bln in 2011
* Shares down 3.5 percent
(Adds interview with CEO, updates shares)
By Julie Crust
LONDON, March 8 (Reuters) - Chilean miner Antofagasta (ANTO.L: Quote) announced a special dividend of 100 cents on Tuesday, sweetening a set of annual profit figures that missed forecast due to higher energy costs.
The copper miner said it would pay a final dividend of 112 cents, including the special dividend, reflecting its continued confidence. It has paid a special dividend for the past seven years, including during the global downturn.
Earnings per share rose 58 percent to 106.7 cents, missing the forecast for 119 cents on higher costs.
"Cost inflation is a concern and is a theme we are likely to see elsewhere, in our view," Numis Securities said in a note.
Cost pressures, particularly rising energy prices, have been rising across the industry, though the impact has been softened by stronger commodity prices.
Antofagasta shares were down 3.5 percent at 1600 GMT, compared with a 2.3 percent fall in a British mining index .
The group's revenue grew 54.5 percent to $4.58 billion on higher copper prices and output.
"Market fundamentals remain positive, and while the high level of volatility that has characterised commodity prices in recent years is expected to continue, consensus estimates are for copper prices to remain favourable in 2011," chief executive Marcelo Awad said.
Larger rivals BHP Billiton (BHP.AX: Quote) (BLT.L: Quote) and Rio Tinto (RIO.AX: Quote) (RIO.L: Quote), flush with cash as demand from China helps fuel a commodity price boom, announced billion dollar buybacks alongside their results.
Average copper prices on the London Metal Exchange rose 46 percent in 2010 and continued rising early this year, peaking at a record in mid-February before easing back on concerns about economic growth. [MET/L]
Antofagasta had previously announced copper output rose 18 percent in 2010, just shy of an already reduced target, and that it expected to produce 715,000 tonnes this year.
Production for first two months of this year has been below target due to lower grades, Awad told Reuters in an interview, though he was confident the group can catch up and so has left 2011 output targets unchanged.
"We may have lower production in Q1. However, after Q2 we will be back to normal," he said, adding that in the second half it expects grades to rise and production at full capacity.
He said the company expected net earnings to rise to about $1.5 billion this year, assuming current metals prices and production targets are met, from $1.05 billion in 2010.
EXPANSION
The company has focused mainly on developing early stage exploration projects.
"We don't rule out an M&A, but at this moment they are all very expensive. They are trading at a huge premium," Awad said.
"We don't foresee any M&A in the near future, but it doesn't mean to say we are not prepared to do it."
His comments echoed those made last month by BHP Billiton's CEO Marius Kloppers, who said the commodity boom had raised price expectations for potential assets.
Antofagasta only targets copper exploration projects, but Awad said it would look at any metal when it comes to M&A.
There is some uncertainty over the $3.3 billion Reko Diq project, a joint venture in Pakistan with Barrick Gold (ABX.TO: Quote), as approval of a mining lease is delayed by a legal probe into the award of the concession in the past.
"We hear conflicting news from the central government compared with the provincial government, so it has been very difficult to read whether they are very eager to have the project up and running or completely against it," Awad said.
On Feb. 18, a Chilean newspaper said Pakistan's top court might rule in a month on the investigation.
"But we have heard this many times," said Awad. He added that the government would probably like to take a larger stake in the project.
"They want us to come to the negotiating table to offer something to them to take away all these petitions, but we are not prepared to do that," he said.
On other exploration projects, a decision on whether to progress with the Antucoya deposit, potentially an 80,000 tonne per year project, will be made in the second half of this year.
Capital expenditure for that project could begin in the middle of next year and in the meantime Antofagasta will look to raise financing and attract a joint venture partner. (Editing by Dan Lalor and Will Waterman, sourced :Thomson Reuters)
* 2010 earnings/share 106.7 cents, vs 119 cents forecast
* Market fundamentals positive, but volatility to continue
* CEO sees net earnings rising to $1.5 bln in 2011
* Shares down 3.5 percent
(Adds interview with CEO, updates shares)
By Julie Crust
LONDON, March 8 (Reuters) - Chilean miner Antofagasta (ANTO.L: Quote) announced a special dividend of 100 cents on Tuesday, sweetening a set of annual profit figures that missed forecast due to higher energy costs.
The copper miner said it would pay a final dividend of 112 cents, including the special dividend, reflecting its continued confidence. It has paid a special dividend for the past seven years, including during the global downturn.
Earnings per share rose 58 percent to 106.7 cents, missing the forecast for 119 cents on higher costs.
"Cost inflation is a concern and is a theme we are likely to see elsewhere, in our view," Numis Securities said in a note.
Cost pressures, particularly rising energy prices, have been rising across the industry, though the impact has been softened by stronger commodity prices.
Antofagasta shares were down 3.5 percent at 1600 GMT, compared with a 2.3 percent fall in a British mining index .
The group's revenue grew 54.5 percent to $4.58 billion on higher copper prices and output.
"Market fundamentals remain positive, and while the high level of volatility that has characterised commodity prices in recent years is expected to continue, consensus estimates are for copper prices to remain favourable in 2011," chief executive Marcelo Awad said.
Larger rivals BHP Billiton (BHP.AX: Quote) (BLT.L: Quote) and Rio Tinto (RIO.AX: Quote) (RIO.L: Quote), flush with cash as demand from China helps fuel a commodity price boom, announced billion dollar buybacks alongside their results.
Average copper prices on the London Metal Exchange rose 46 percent in 2010 and continued rising early this year, peaking at a record in mid-February before easing back on concerns about economic growth. [MET/L]
Antofagasta had previously announced copper output rose 18 percent in 2010, just shy of an already reduced target, and that it expected to produce 715,000 tonnes this year.
Production for first two months of this year has been below target due to lower grades, Awad told Reuters in an interview, though he was confident the group can catch up and so has left 2011 output targets unchanged.
"We may have lower production in Q1. However, after Q2 we will be back to normal," he said, adding that in the second half it expects grades to rise and production at full capacity.
He said the company expected net earnings to rise to about $1.5 billion this year, assuming current metals prices and production targets are met, from $1.05 billion in 2010.
EXPANSION
The company has focused mainly on developing early stage exploration projects.
"We don't rule out an M&A, but at this moment they are all very expensive. They are trading at a huge premium," Awad said.
"We don't foresee any M&A in the near future, but it doesn't mean to say we are not prepared to do it."
His comments echoed those made last month by BHP Billiton's CEO Marius Kloppers, who said the commodity boom had raised price expectations for potential assets.
Antofagasta only targets copper exploration projects, but Awad said it would look at any metal when it comes to M&A.
There is some uncertainty over the $3.3 billion Reko Diq project, a joint venture in Pakistan with Barrick Gold (ABX.TO: Quote), as approval of a mining lease is delayed by a legal probe into the award of the concession in the past.
"We hear conflicting news from the central government compared with the provincial government, so it has been very difficult to read whether they are very eager to have the project up and running or completely against it," Awad said.
On Feb. 18, a Chilean newspaper said Pakistan's top court might rule in a month on the investigation.
"But we have heard this many times," said Awad. He added that the government would probably like to take a larger stake in the project.
"They want us to come to the negotiating table to offer something to them to take away all these petitions, but we are not prepared to do that," he said.
On other exploration projects, a decision on whether to progress with the Antucoya deposit, potentially an 80,000 tonne per year project, will be made in the second half of this year.
Capital expenditure for that project could begin in the middle of next year and in the meantime Antofagasta will look to raise financing and attract a joint venture partner. (Editing by Dan Lalor and Will Waterman, sourced :Thomson Reuters)
Saturday, March 5, 2011
PDAC-Bull market for metals signals a spate of mining deals
Fri Mar 4, 2011 11:44pm GMT
* World's largest annual mining convention set to kick off
* Miners ebullient with metal prices near record highs
* M&A activity in sector expected to gather pace in 2011
By Euan Rocha
TORONTO, March 4 (Reuters) - This year the world's biggest mining convention could turn into a bonanza for deal makers as eager mining companies look for ways to take advantage of a raging bull market for metals.
The event, organized by the Prospectors and Developers Association of Canada (PDAC), brings together nearly everyone who is anyone in the world of mining -- and it gives miners an unparalleled opportunity to talk shop and strike deals.
The dealmaking that PDAC could stir up this year may very well shift into overdrive, according to many of those who will attend, as the industry responds to a number of powerful, intersecting trends.
Prices of base metals are near record highs, while surging demand is only expected to accelerate, fueled by the building booms of China, India and Latin America. At the same time, major producers are expecting their production to contract unless replacements can be found.
Gold and silver miners are benefiting from one of the biggest sustained rallies in modern history, driven by inflation concerns, political turmoil, an uneven U.S. economic recovery and the European sovereign debt crisis.
That means junior miners and explorers -- those with assets that are close to going into production -- have never had it so good. Established miners are motivated buyers willing to pay top dollar for high-quality properties that can be developed quickly.
"I think deal activity is going to intensify, because companies' cash flows are enormous and lots of companies aren't replacing their production," said Donald Coxe one of Canada's most influential money managers.
The solution for many is to find attractive junior miners and explorers with projects that require little lead time before they can begin producing. For a major producer shopping around or a junior looking to sell, the PDAC convention in Toronto is a must-attend showcase.
"There are a lot of deals done during the convention. If you have a property you want to get rid of, or put into a company, or if you are a company looking for properties it is the best place you can go," said Terry Schorn an adviser to exploration company Eagle Hill (EAG.V: Quote).
"For me the best part of it is meeting people, it's a great place for contacts ... Quite often a deal does not happen at the convention, but you meet somebody and follow up and deals get done later," said Schorn, a veteran geologist who has attended the PDAC event since 1953.
With record cash flows, many miners have opted to initiate or raise dividends, while others are opting to use their new wealth to buy assets and secure long-term supplies. Exploration companies at the event are eager to show off their wares.
"We'll be looking at other opportunities, other companies that are (at PDAC)," said Chief Executive Robert Quartermain of gold explorer Pretium (PVG.TO: Quote). "We'll be meeting with majors so they fully understand the opportunity that we have."
The annual PDAC event attracted more than 22,000 attendees last year, and with metal prices soaring, an even larger audience is expected this year.
Canada is a natural home for the event, as the Toronto Stock Exchange and the small-cap TSX Venture Exchange are home to close to 60 percent of the world's publicly listed mining companies. In fact, miners and exploration companies account for more than 40 percent of the roughly 3,700 companies listed on both exchanges. John Nyholt, who heads PwC's M&A services team, notes that the conference started off with miners coming out of the bush looking to raise finances and show off their finds. "They still have all these booths and tables, where you can go and invest in a small mining deal..
Today there is a strong technical aspect to the program, but the fund-raising stuff, it still happens," said Nyholt. In a report published on the eve of the convention, PwC predicts that deal activity is only expected to gather pace this year, as the prices of metals rise even further. "We are definitely going to see a strong pace in 2011 in terms of volume and we also believe we will see more mega deals," said John Nyholt, who co-authored the PwC report. With the ongoing political turmoil in the Middle East and North Africa, Donald Coxe argues that gold prices are likely to rise even further. Gold rose above $1,430 an ounce on Friday, while silver surged 3 percent to 31-year highs, as soaring oil prices fueled by widening unrest in Libya prompted investors to pile into safe havens.
Bullion already hit a record high of $1,440.10 an ounce on Wednesday and is on track to rise further on fears that Libya's escalating violence could spread across the Arab world. Coxe believes these record prices are only going to fuel further M&A activity among precious metals miners. "Mining companies have a choice between paying out more money in dividends, or expanding their ore reserves and I think we are going to have more M&A," said Coxe, a former Bank of Montreal strategist who now heads Chicago-based Coxe Advisors.
"The greatest amount of activity is going to be in the precious metals group, because the companies having gotten out of their hedging programs a couple of years ago are now making a lot of money, so I think there's going to be lots of takeovers of gold companies," he said. (Reporting by Euan Rocha, Pav Jordan, Julie Gordon and Cameron French; Editing by Frank McGurty and Rob Wilson, sourced:Thomson Reuters)
The event, organized by the Prospectors and Developers Association of Canada (PDAC), brings together nearly everyone who is anyone in the world of mining -- and it gives miners an unparalleled opportunity to talk shop and strike deals.
The dealmaking that PDAC could stir up this year may very well shift into overdrive, according to many of those who will attend, as the industry responds to a number of powerful, intersecting trends.
Prices of base metals are near record highs, while surging demand is only expected to accelerate, fueled by the building booms of China, India and Latin America. At the same time, major producers are expecting their production to contract unless replacements can be found.
Gold and silver miners are benefiting from one of the biggest sustained rallies in modern history, driven by inflation concerns, political turmoil, an uneven U.S. economic recovery and the European sovereign debt crisis.
That means junior miners and explorers -- those with assets that are close to going into production -- have never had it so good. Established miners are motivated buyers willing to pay top dollar for high-quality properties that can be developed quickly.
"I think deal activity is going to intensify, because companies' cash flows are enormous and lots of companies aren't replacing their production," said Donald Coxe one of Canada's most influential money managers.
The solution for many is to find attractive junior miners and explorers with projects that require little lead time before they can begin producing. For a major producer shopping around or a junior looking to sell, the PDAC convention in Toronto is a must-attend showcase.
"There are a lot of deals done during the convention. If you have a property you want to get rid of, or put into a company, or if you are a company looking for properties it is the best place you can go," said Terry Schorn an adviser to exploration company Eagle Hill (EAG.V: Quote).
"For me the best part of it is meeting people, it's a great place for contacts ... Quite often a deal does not happen at the convention, but you meet somebody and follow up and deals get done later," said Schorn, a veteran geologist who has attended the PDAC event since 1953.
With record cash flows, many miners have opted to initiate or raise dividends, while others are opting to use their new wealth to buy assets and secure long-term supplies. Exploration companies at the event are eager to show off their wares.
"We'll be looking at other opportunities, other companies that are (at PDAC)," said Chief Executive Robert Quartermain of gold explorer Pretium (PVG.TO: Quote). "We'll be meeting with majors so they fully understand the opportunity that we have."
The annual PDAC event attracted more than 22,000 attendees last year, and with metal prices soaring, an even larger audience is expected this year.
Canada is a natural home for the event, as the Toronto Stock Exchange and the small-cap TSX Venture Exchange are home to close to 60 percent of the world's publicly listed mining companies. In fact, miners and exploration companies account for more than 40 percent of the roughly 3,700 companies listed on both exchanges. John Nyholt, who heads PwC's M&A services team, notes that the conference started off with miners coming out of the bush looking to raise finances and show off their finds. "They still have all these booths and tables, where you can go and invest in a small mining deal..
Today there is a strong technical aspect to the program, but the fund-raising stuff, it still happens," said Nyholt. In a report published on the eve of the convention, PwC predicts that deal activity is only expected to gather pace this year, as the prices of metals rise even further. "We are definitely going to see a strong pace in 2011 in terms of volume and we also believe we will see more mega deals," said John Nyholt, who co-authored the PwC report. With the ongoing political turmoil in the Middle East and North Africa, Donald Coxe argues that gold prices are likely to rise even further. Gold rose above $1,430 an ounce on Friday, while silver surged 3 percent to 31-year highs, as soaring oil prices fueled by widening unrest in Libya prompted investors to pile into safe havens.
Bullion already hit a record high of $1,440.10 an ounce on Wednesday and is on track to rise further on fears that Libya's escalating violence could spread across the Arab world. Coxe believes these record prices are only going to fuel further M&A activity among precious metals miners. "Mining companies have a choice between paying out more money in dividends, or expanding their ore reserves and I think we are going to have more M&A," said Coxe, a former Bank of Montreal strategist who now heads Chicago-based Coxe Advisors.
"The greatest amount of activity is going to be in the precious metals group, because the companies having gotten out of their hedging programs a couple of years ago are now making a lot of money, so I think there's going to be lots of takeovers of gold companies," he said. (Reporting by Euan Rocha, Pav Jordan, Julie Gordon and Cameron French; Editing by Frank McGurty and Rob Wilson, sourced:Thomson Reuters)
Friday, March 4, 2011
Japan-Korea partnership to buy 15 percent stake in Brazilian niobium company
Friday, 04 March 2011
A Japanese investor group consisting of JFE Steel Corporation, Nippon Steel Corporation, Sojitz Corporation and Japan Oil, Gas and Metals National Corporation and a Korean investor group consisting of major Korean steel producer POSCO and South Korea's National Pension Service have entered into an agreement with the controlling shareholders of the Brazilian niobium company Companhia Brasileira de Metalurgia e Mineração (CBMM) under which the Japan-Korea partnership will acquire a 15 percent stake in CBMM.
Niobium is a critical alloying additive in the production of high-grade steel products. As the most comprehensive supplier of niobium products in the world, CBMM is in a position to secure a continuous supply system of the metal as the need for high-grade steel products grows.
The four Japanese companies will acquire a 10 percent stake and the two Korean companies will buy a five percent stake in CBMM. The amount of the investment by the Japan consortium and the Korea consortium will be $1.3 billion and $650 million respectively, and each of the six consortium partners will indirectly hold a 2.5 percent stake in CBMM.
In addition to the acquisition of CBMM shares, JFE, Nippon Steel, POSCO and Sojitz have entered into a long-term niobium supply agreement with CBMM, assuring that the stable relationship these companies have long had with CBMM continues. (sourced:steelorbis)
Niobium is a critical alloying additive in the production of high-grade steel products. As the most comprehensive supplier of niobium products in the world, CBMM is in a position to secure a continuous supply system of the metal as the need for high-grade steel products grows.
The four Japanese companies will acquire a 10 percent stake and the two Korean companies will buy a five percent stake in CBMM. The amount of the investment by the Japan consortium and the Korea consortium will be $1.3 billion and $650 million respectively, and each of the six consortium partners will indirectly hold a 2.5 percent stake in CBMM.
In addition to the acquisition of CBMM shares, JFE, Nippon Steel, POSCO and Sojitz have entered into a long-term niobium supply agreement with CBMM, assuring that the stable relationship these companies have long had with CBMM continues. (sourced:steelorbis)
Renco Group: RG Steel to become fourth-largest flat rolled steel producer in US
Fri, Mar04, 20100
US-based private investment holding company Renco Group has announced that, following the acquisition of three steel companies currently owned by Russian steelmaker Severstal estimated at $1.2 billion, its newly-formed subsidiary RG Steel will become the fourth-largest flat rolled steel producer in the US.
Accordingly, in addition to Severstal's Sparrows Point, Warren and Wheeling facilities, RG Steel will acquire a 50 percent ownership interest in Mountain State Carbon LLC, a cokemaking facility in Follansbee, West Virginia, and Ohio Coatings Company, based in Yorkville, Ohio. RG Steel will receive one half of the coke output from Mountain State Carbon and will continue its long-standing relationship with Ohio Coatings Company. The purchase of these assets will provide RG Steel with approximately 7.5 million mt of annualized steelmaking capacity.
"The formation of RG Steel will create a dynamic, service-oriented company with strategically located facilities," Renco Group's president Ari Rennert stated.
RG Steel will be headquartered at Sparrows Point, Maryland. Completion of the sale is expected in March 2011, pending regulatory approval.
US-based private investment holding company Renco Group has announced that, following the acquisition of three steel companies currently owned by Russian steelmaker Severstal estimated at $1.2 billion, its newly-formed subsidiary RG Steel will become the fourth-largest flat rolled steel producer in the US.
Accordingly, in addition to Severstal's Sparrows Point, Warren and Wheeling facilities, RG Steel will acquire a 50 percent ownership interest in Mountain State Carbon LLC, a cokemaking facility in Follansbee, West Virginia, and Ohio Coatings Company, based in Yorkville, Ohio. RG Steel will receive one half of the coke output from Mountain State Carbon and will continue its long-standing relationship with Ohio Coatings Company. The purchase of these assets will provide RG Steel with approximately 7.5 million mt of annualized steelmaking capacity.
"The formation of RG Steel will create a dynamic, service-oriented company with strategically located facilities," Renco Group's president Ari Rennert stated.
RG Steel will be headquartered at Sparrows Point, Maryland. Completion of the sale is expected in March 2011, pending regulatory approval.
Wednesday, March 2, 2011
Two steel titans to form in Shanxi in 12th Five Year
Wednesday, 02 Mar 2011 | Xinhuanet
It is reported that Shanxi steel industrial consolidation plan is going to be issued in the coming few days.
As per report, a large scaled drive for enterprise merger and acquisition will be carried out and by 2015 and there will be two steel titans in local to be formed, Taiyuan Iron and Steel Group and Shougang Changzhi Iron and Steel Group.
At present, five steel bases have been established in Shanxi, namely Taiyuan, Southeast Shanxi area, Yuncheng, Linfen and Lvliang. TISCO and Shougang Changzhi will take the major role in this regrouping campaign, with the former chiefly responsible for consolidation of steel mills in Taiyuan, Linfen, Yuncheng and Lvliang and the latter for those in Southeast Shanxi area.
According to the slated schedule, TISCO will complete the regrouping in Taiyuan and Linfen areas by 2013 and that in Yuncheng and Lvliang by 2015. Shougang Changzhi will finish its consolidation target in Changzhi by 2013 and of Fusheng Steel by 2015.
By 2015, as per the plan TISCO will expand its production capacity to 40 million tonnes and thus lift its proportion of contribution to 80% in Shanxi Province. Its annual business income will reach over CNY 200 billion and it will be listed in the first eights of China’s steel enterprises for its comprehensive strength and become a world-class competitive large steel Group. Shougang Changzhi will develop into a group capable of producing 10mln tonnes a year and raise its contribution to 20% in Shanxi Province.
As per report, a large scaled drive for enterprise merger and acquisition will be carried out and by 2015 and there will be two steel titans in local to be formed, Taiyuan Iron and Steel Group and Shougang Changzhi Iron and Steel Group.
At present, five steel bases have been established in Shanxi, namely Taiyuan, Southeast Shanxi area, Yuncheng, Linfen and Lvliang. TISCO and Shougang Changzhi will take the major role in this regrouping campaign, with the former chiefly responsible for consolidation of steel mills in Taiyuan, Linfen, Yuncheng and Lvliang and the latter for those in Southeast Shanxi area.
According to the slated schedule, TISCO will complete the regrouping in Taiyuan and Linfen areas by 2013 and that in Yuncheng and Lvliang by 2015. Shougang Changzhi will finish its consolidation target in Changzhi by 2013 and of Fusheng Steel by 2015.
By 2015, as per the plan TISCO will expand its production capacity to 40 million tonnes and thus lift its proportion of contribution to 80% in Shanxi Province. Its annual business income will reach over CNY 200 billion and it will be listed in the first eights of China’s steel enterprises for its comprehensive strength and become a world-class competitive large steel Group. Shougang Changzhi will develop into a group capable of producing 10mln tonnes a year and raise its contribution to 20% in Shanxi Province.
Sunday, February 27, 2011
China to account for 9pct of global acquisition deals - JPMorgan
Sunday, 27 Feb 2011
Bloomberg citing Mr Brian Gu head of JPMorgan China M&A unit China should account for 8 to 9 percent of global mergers and acquisition activity this year, continuing close to its strong levels in 2009 and 2010.
He said Consolidation in the consumer retail, real estate, healthcare, and chemical and industrial sectors are likely to power China's domestic M&A this year. China's inbound and outbound M&A deals in 2010 amounted to USD 236 billion out of a global total of USD 2.8 trillion or a little more than 8%.
Mr Gu said "Amid an overall recovery in M&A activity globally, China has seen a sharp rise, taking advantage of the financial crisis and maintained a pretty large share in this rebounding market last year."
He said that "Overall China as a large component of global M&A activity, is here to stay."
Mr Gu said China will probably continue its performance in outbound M&A after chalking up a record USD 54 billion in 2010. He said that recent stumbles by Chinese firms seeking to acquire all or part of foreign companies, such as Huawei's attempt to acquire server technology firm 3Leaf and Xinmao Group's play for the Dutch cable maker Draka shouldn't cast a shadow on future outbound Chinese deals.
He added that "China has always regulated inbound M&A from a security perspective."
Mr Gu said "I don't think this changes the regulatory environment; it doesn't mean it's more stringent or looser. I think it does lay out a protocol that parties can actually point to as to the process by which they'll be evaluated."
JPMorgan handled the largest volume of cross-border Chinese M&A last year with a transaction volume of USD 11.1 billion or 10.6% of the market, according to Dealogic. Credit Suisse was a close second with USD 10.7 billion or 10.2%.(sourced:bloomberg)
He said Consolidation in the consumer retail, real estate, healthcare, and chemical and industrial sectors are likely to power China's domestic M&A this year. China's inbound and outbound M&A deals in 2010 amounted to USD 236 billion out of a global total of USD 2.8 trillion or a little more than 8%.
Mr Gu said "Amid an overall recovery in M&A activity globally, China has seen a sharp rise, taking advantage of the financial crisis and maintained a pretty large share in this rebounding market last year."
He said that "Overall China as a large component of global M&A activity, is here to stay."
Mr Gu said China will probably continue its performance in outbound M&A after chalking up a record USD 54 billion in 2010. He said that recent stumbles by Chinese firms seeking to acquire all or part of foreign companies, such as Huawei's attempt to acquire server technology firm 3Leaf and Xinmao Group's play for the Dutch cable maker Draka shouldn't cast a shadow on future outbound Chinese deals.
He added that "China has always regulated inbound M&A from a security perspective."
Mr Gu said "I don't think this changes the regulatory environment; it doesn't mean it's more stringent or looser. I think it does lay out a protocol that parties can actually point to as to the process by which they'll be evaluated."
JPMorgan handled the largest volume of cross-border Chinese M&A last year with a transaction volume of USD 11.1 billion or 10.6% of the market, according to Dealogic. Credit Suisse was a close second with USD 10.7 billion or 10.2%.(sourced:bloomberg)
Wednesday, February 23, 2011
Deals of the day -- mergers and acquisitions
Wed Feb 23, 2011 2:32pm GMT
Feb 23 (Reuters) - The following bids, mergers, acquisitions and disposals involving European, U.S. and Asian companies were reported by 1430 GMT on Wednesday.
** Enterprise Products Partners L.P. has offered to buy its majority-owned midstream energy firm Duncan Energy Partners L.P. for about $2.42 billion in units to ramp up its pipeline services amid higher North American gas production.
** Mitsubishi UFJ Financial Group and Norinchukin Bank are planning to invest an additional 100 billion yen ($1.2 billion) in credit card firm Mitsubishi UFJ Nicos, two sources familiar with the matter said.
** Rio Tinto , the world's third-largest miner by market value, said it received a binding $340 million offer from industrial materials group Imerys for its talc business.
** Belgian holding company RHJ International will sell its 77.9 percent stake in Japanese car switches maker Niles Co. Ltd for 15.5 billion yen ($187.5 million) in cash, it said.
** Cable & Wireless Communications said it would sell its operating business in Bermuda to Canada's Bragg Group for $70 million, as it remodels its Caribbean operations to battle a weak economy and strong competition.
** Nasdaq OMX Group Inc could launch a rival bid for NYSE Euronext to avoid being left out of a global merger frenzy among exchanges, a source said.
** Rotork PLC said it is to buy Rotork Servo Controles De Mexico, its Mexican sales and service agent.
** Lockheed Martin Corp is selling its Pacific Architects and Engineers Inc military services business to private equity firm Lindsay Goldberg LLC.
** Tesco , Britain's biggest retailer, is not the leading contender for Polish retail chain Zabka, put on the block by private equity firm Penta Investments, several sources told Reuters.
** Hong Kong's CLP Holdings Ltd is likely to sell a 24 percent stake in Thailand's Electricity Generating Pcl (EGCO) to Tokyo Electric Power Co , a source close to the deal said.
** Danish shipping and oil group A.P. Moller-Maersk expects to finalise the sale of supermarket chain Netto in the UK "some time in 2011", Chief Executive Nils Andersen told a teleconference.
** Natixis SA is still interested in UniCredit SpA's asset manager Pioneer, the French bank's chairman said and UniCredit said bids should be made by the end of March.
** Dutch food and chemicals group CSM unveiled plans a for a new bio plastics joint venture and said it was in talks to set up the new factory with Thai-based Indorama Ventures .
** Qatar is open to buying stakes in part state-owned UK lenders RBS and Lloyds Banking Group and has discussed investing in the UK, Prime Minister Sheikh Hamad bin Jassim bin Jabr al-Thani said.
** Spanish infrastructure firm Abertis is studying a plan to spin off its car parking and logistics units, the latest indication of the influence its new, dividend-hungry private equity shareholder is exerting.
(Compiled by Swetha Gopinath and Rachel Chitra in Bangalore, sourced:Thomson Reuters)
Monday, February 21, 2011
Regulatory uncertainty puts investors off SA mine assets
Feb18, 2011
By Londiwe Buthelezi
Uncertainty about the regulatory framework and the outcome of the nationalisation debate is set to hinder mergers and acquisitions (M&As) in the local mining sector this year, compounding the outlook for the industry.
Investment analysts say the country is unlikely to see any jockeying by investors to plough money into deal making until there is clarity on key policy issues and power supply concerns are tackled.
Major mining companies, on the other hand, are increasingly considering disposals of non-strategic assets. That push partly reflects a bid by some companies to pare back some of the exposure to the risks now associated with the industry.
BHP Billiton Energy Coal South Africa is putting up some of its undeveloped coal assets for sale, and has invited tenders from parties interested in the assets.
Anglo American announced earlier this month that it had completed the sale of its Black Mountain Mining zinc interests in South Africa to Vedanta Resources for cash proceeds of $346 million (R2.5 billion).
Toby Mannock, the head of investment banking at Renaissance Capital, said asset disposals would be commonplace in 2011, if the investment climate was perceived to be increasingly risky, particularly to capital-intense, long-term projects.
He said international mining companies would undertake an extensive risk analysis when deciding to either acquire assets or dispose of interests in any geography.
“However, in South Africa, considerations will likely include technical mining risks like deep level mining, the rand’s volatility, local cost inflation and the political climate (for example, the nationalisation debate).”
Analysts say the country could lose out as investors are swayed by the emergence of new mineral wealth in the western parts of Africa.
Investment analysts say that, with other African countries increasingly revealing commodities in high demand, attention is gradually being diverted away from South Africa, which used to be the magnetic pole for investment in the continent’s mining sector.
South Africa has not seen a major deal in its mining sector since 2007, when Gold Fields acquired all the remaining Western Areas and the South Deep gold mine for R22.2bn.
According to a Zephyr report published by Bureau van Dijk, there were only 38 M&A transactions to the tune of e3.4bn (R33.5bn) in the South African mining sector last year, compared with 28 deals worth e2.71bn in 2009. In terms of value, the 2010 deals put South Africa in the bottom half of the top 10 biggest mining deals by value, behind Canada, Australia, Russia, China, US, Papua New Guinea and Brazil.
Rishon Chimboza, a senior consultant at pan-African investment consulting firm africapractice, said he expected a slowdown in mining M&As because shareholders did not appear to have much appetite to pursue major deals, with all the regulatory approval and price regulation they had to go through.
On the other hand, the picture is more encouraging for junior companies.
Percy Takunda, an analyst at Imara SP Reid, said: “In the junior platinum space there is always room for consolidation. But the problem is that they (junior companies) do not come widely discounted anymore.”
Peter Leon, a partner at Webber Wentzel, said the existence of regulatory uncertainty in the form of a more interventionist revised Mining Charter and the uncertainty around the proposed amendments to the Mineral and Petroleum Resources Development Act were some of the factors already pushing investors to look elsewhere.
This was not only detrimental to the M&A outlook but to investor confidence as well.
“The pending decision of the ANC with regard to mine nationalisation, coupled with the continuing difficulty that some foreign investors have in understanding and complying with black economic empowerment requirements, could hinder investment in the (local) mining industry,” he said.
Leon said clarity was necessary for investors to commit money in mining, particularly with its long lead times and massive capital expenditures. - (sourced:Business Report, www.iol.co.za)
Tags:high-vol (high volatility) met coal, political climate, Pan- African investment, Africanpractice, Mining Charter, technical mining risks, long-term projects, risk analysis, acquire assets,Anglo American Plc, Black Mountain Mining zinc, Renaissance Capital, capital-intense,
By Londiwe Buthelezi
Uncertainty about the regulatory framework and the outcome of the nationalisation debate is set to hinder mergers and acquisitions (M&As) in the local mining sector this year, compounding the outlook for the industry.
Investment analysts say the country is unlikely to see any jockeying by investors to plough money into deal making until there is clarity on key policy issues and power supply concerns are tackled.
Major mining companies, on the other hand, are increasingly considering disposals of non-strategic assets. That push partly reflects a bid by some companies to pare back some of the exposure to the risks now associated with the industry.
BHP Billiton Energy Coal South Africa is putting up some of its undeveloped coal assets for sale, and has invited tenders from parties interested in the assets.
Anglo American announced earlier this month that it had completed the sale of its Black Mountain Mining zinc interests in South Africa to Vedanta Resources for cash proceeds of $346 million (R2.5 billion).
Toby Mannock, the head of investment banking at Renaissance Capital, said asset disposals would be commonplace in 2011, if the investment climate was perceived to be increasingly risky, particularly to capital-intense, long-term projects.
He said international mining companies would undertake an extensive risk analysis when deciding to either acquire assets or dispose of interests in any geography.
“However, in South Africa, considerations will likely include technical mining risks like deep level mining, the rand’s volatility, local cost inflation and the political climate (for example, the nationalisation debate).”
Analysts say the country could lose out as investors are swayed by the emergence of new mineral wealth in the western parts of Africa.
Investment analysts say that, with other African countries increasingly revealing commodities in high demand, attention is gradually being diverted away from South Africa, which used to be the magnetic pole for investment in the continent’s mining sector.
South Africa has not seen a major deal in its mining sector since 2007, when Gold Fields acquired all the remaining Western Areas and the South Deep gold mine for R22.2bn.
According to a Zephyr report published by Bureau van Dijk, there were only 38 M&A transactions to the tune of e3.4bn (R33.5bn) in the South African mining sector last year, compared with 28 deals worth e2.71bn in 2009. In terms of value, the 2010 deals put South Africa in the bottom half of the top 10 biggest mining deals by value, behind Canada, Australia, Russia, China, US, Papua New Guinea and Brazil.
Rishon Chimboza, a senior consultant at pan-African investment consulting firm africapractice, said he expected a slowdown in mining M&As because shareholders did not appear to have much appetite to pursue major deals, with all the regulatory approval and price regulation they had to go through.
On the other hand, the picture is more encouraging for junior companies.
Percy Takunda, an analyst at Imara SP Reid, said: “In the junior platinum space there is always room for consolidation. But the problem is that they (junior companies) do not come widely discounted anymore.”
Peter Leon, a partner at Webber Wentzel, said the existence of regulatory uncertainty in the form of a more interventionist revised Mining Charter and the uncertainty around the proposed amendments to the Mineral and Petroleum Resources Development Act were some of the factors already pushing investors to look elsewhere.
This was not only detrimental to the M&A outlook but to investor confidence as well.
“The pending decision of the ANC with regard to mine nationalisation, coupled with the continuing difficulty that some foreign investors have in understanding and complying with black economic empowerment requirements, could hinder investment in the (local) mining industry,” he said.
Leon said clarity was necessary for investors to commit money in mining, particularly with its long lead times and massive capital expenditures. - (sourced:Business Report, www.iol.co.za)
Tags:high-vol (high volatility) met coal, political climate, Pan- African investment, Africanpractice, Mining Charter, technical mining risks, long-term projects, risk analysis, acquire assets,Anglo American Plc, Black Mountain Mining zinc, Renaissance Capital, capital-intense,
Sunday, February 20, 2011
BHP CEO sees high iron ore price for up to 2 years
Sat Feb 19, 2011 11:30pm GMT
MELBOURNE Feb 20 (Reuters) - Top global miner BHP Billiton's (BHP.AX: Quote)(BLT.L: Quote) chief executive sees iron ore prices staying strong for as long as two years, and is confident the company's profit margins will remain robust, even as costs escalate.
Marius Kloppers was bullish on the near-term outlook for iron ore prices due to supply constraints, with India not exporting and rivals having held back investment in new capacity during the global financial crisis.
"But what I can say is there are certain products in our portfolio, particularly in iron ore...which looks very, very good over the next three, six and nine months," Kloppers said on Australian television in an interview recorded after the company reported a record first-half profit of $10.7 billion.
"Simply put, over the next 12, 18 months, perhaps two years, there's not a substantial amount of new capacity coming on, and it's more an issue of the supply side rather than the demand side," he said.
His counterpart at rival Rio Tinto (RIO.AX: Quote)(RIO.L: Quote) was more specific a week ago, forecasting that tight supplies would keep iron ore prices high in the near term, but prices would fall below $100 a tonne from current record highs around $190 a tonne when mine expansions are completed in 2014 and 2015. [ID:nL3E7DA0K8]
BHP announced this week it would spend $80 billion on mine developments and expansions over the next five years, and Kloppers said based on expected returns on those projects, it should be able to post compound growth of 5-6 percent a year for "many many years".
"For us it's a question of where cost structures go, but I feel very comfortable that we're going to have healthy margins going forward," Kloppers said on Australian Broadcasting Corp's Inside Business show, aired on Sunday.
BHP had a 44 percent profit margin in the first half of this financial year.
Kloppers played down talk that the company had put acquisitions on the backburner in favour of investing in its own projects, saying while takeover targets were expensive now based on lofty commodity prices, that may not last long.
Asked if mergers and acquisitions were off the agenda, he said: "No. Cycles change."
"In six months' time or a year's time, something else may come up, the situation may change."
After being forced to kill three mega-deals since 2008 due mainly to regulatory and political obstacles, Kloppers said the company would clearly run into problems if it chased an iron ore acquisition, like its abandoned bid for no.2 iron ore miner Rio Tinto.
But he saw no such obstacles for deals in products where BHP was less dominant, including potash, copper, and oil and gas, as industry experts have speculated.
"And obviously, the oil and gas market is a very large one where there may be opportunities going forward," he said.
Speculation has focused on BHP chasing Anadarko Petroleum (APC.N: Quote) for its assets in the Gulf of Mexico.
Kloppers deflected questions about diplomatic cables released by WikiLeaks, which showed he had offered to trade intelligence on China with Washington, as he was concerned about Chinese spying on BHP. [ID:nL3E7DE27I]
"I certainly don't remember offering anything," he said.
Did he have any secrets to offer? "Not that I know of," he said.
(Reporting by Sonali Paul, sourced:Thomson Reuters)
Sunday, February 13, 2011
Rio Tinto chief expects iron ore price to ease
Feb14, 2011 12:00AM, The Australian,
RIO Tinto, the world's second-biggest miner of iron ore, expects the price of the commodity to ease in two to five years as new supply comes to market.
Chief executive Tom Albanese said: "It's hard to find big new areas of supply globally, particularly in 2011.
"But in 2013, 2014 or 2015, you will see a lot of new iron ore coming into the market and it's probably going to put the market closer in balance than it is today."
Mr Albanese told ABC's Inside Business program that the iron ore markets, "when they come into equilibrium, will lead to some softness in those markets longer term.
"I think anyone that invests on the basis of today's prices is likely to be disappointed down the road.
"The question really will be: over the next five to 10 years will be, what will be the global steel demand and how will that translate to iron ore production? I think realistically we can expect a reversion from current levels."
Rio last week said its 2010 profit nearly tripled to a record $US14.3 billion ($14.25bn), largely due to record prices for iron ore and copper during booming demand from China.
Expanding its Pilbara iron ore operations in Western Australia by over 50 per cent over the next five years would be Rio's top growth priority, Mr Albanese said.
On copper, he said the longer prices remained high, the greater the supply response would be.
"I think we will see a continued period of strong copper pricing, largely because many of the large mines . . . are seeing declining grades (and) deepening pits, but you will see new mines . . . so we will see new copper supply coming in and that will begin balancing out with demand."
In regard to potash, Mr Albanese said he would rather look at small mergers and acquisitions opportunities to bolt on to the existing Rio businesses.
(sourced:Dow Jones Newswires)
RIO Tinto, the world's second-biggest miner of iron ore, expects the price of the commodity to ease in two to five years as new supply comes to market.
Chief executive Tom Albanese said: "It's hard to find big new areas of supply globally, particularly in 2011.
"But in 2013, 2014 or 2015, you will see a lot of new iron ore coming into the market and it's probably going to put the market closer in balance than it is today."
Mr Albanese told ABC's Inside Business program that the iron ore markets, "when they come into equilibrium, will lead to some softness in those markets longer term.
"I think anyone that invests on the basis of today's prices is likely to be disappointed down the road.
"The question really will be: over the next five to 10 years will be, what will be the global steel demand and how will that translate to iron ore production? I think realistically we can expect a reversion from current levels."
Rio last week said its 2010 profit nearly tripled to a record $US14.3 billion ($14.25bn), largely due to record prices for iron ore and copper during booming demand from China.
Expanding its Pilbara iron ore operations in Western Australia by over 50 per cent over the next five years would be Rio's top growth priority, Mr Albanese said.
On copper, he said the longer prices remained high, the greater the supply response would be.
"I think we will see a continued period of strong copper pricing, largely because many of the large mines . . . are seeing declining grades (and) deepening pits, but you will see new mines . . . so we will see new copper supply coming in and that will begin balancing out with demand."
In regard to potash, Mr Albanese said he would rather look at small mergers and acquisitions opportunities to bolt on to the existing Rio businesses.
(sourced:Dow Jones Newswires)
China to vet inward M&A deals for national security
Sat Feb 12, 2011 12:25pm GMT
Feb 12 (Reuters) -
* Foreign M&A deals in China subject to additional checks
* New rules come into effect in March
* Beijing may block deals that it deems to harm security
BEIJING, Feb 12 (Reuters) - China will launch a state-level investment review body to check that merger and acquisition deals struck by foreign firms in one of the world's fastest-growing economies do not endanger "national security", China's State Council, the cabinet, said on Saturday.
The new regulation, which will come into effect in March, is set to install a new red-tape barrier for doing business in China, the world's second largest economy where double-digit growth has attracted more than $105 billion in foreign direct investment last year.
Foreign investments in military, agriculture, energy and resources, key infrastructure, transport systems, key technology sectors and "important equipment manufacturers" may be subject to reviews, according to a statement published on the central government Internet portal, www.gov.cn.
The review will be conducted by a "foreign investment security review board" under the cabinet. Members of the board will come from the National Development and Reform Commission, the Ministry of Commerce and other agencies on ad hoc basis.
The new body could enable China to turn the tables on some countries that have previously blocked its investments on national security grounds.
China suffered the biggest knock to its deal-making confidence in 2005, when state-controlled oil firm CNOOC Ltd withdrew an $18.5 billion bid for U.S. oil firm Unocal after the Senate moved to block it on national interest grounds.
But Beijing, which introduced an anti-trust law in 2008, has also blocked deals that do not conform with its national plans in the past.
China rejected Coca-Cola's $2.4 billion bid for China's top juice maker Huiyuan , in 2009 and buyout giant Carlyle's $375 million bid for Xugong, China's biggest construction equipment maker, in 2008.
The government wants to consolidate many heavy industries such as steel into the hands of a few big players, and it has blocked several foreign attempts to buy into its huge steel sector, by far the world's biggest.
In 2007, it blocked ArcelorMittal from gaining a majority stake in China Oriental Group and in 2009 it forced Russia's Evraz Group to abandon an option to take control of Delong Holdings Ltd , a Chinese steelmaker listed in Singapore, in a $1.5 billion deal.
INVESTOR-UNFRIENDLY?
China attracted $105.7 billion in foreign direct investments in 2010, 17.4 percent more than in 2009, but some foreign businesses have complained that the Chinese government is becoming more unfriendly towards investors.
According to the new regulation, Chinese government agencies, trade associations, competitors, suppliers and other related parties are allowed to apply for the start of a review of a foreign-related M&A deal.
The process will include two parts as "general review" and "special review". For those deals failed to pass the "general review", a "special review" will be started that may last up to 60 days.
If Beijing finds a deal that could potentially threaten national security, it can terminate the deal.
"Related departments and units must enhance the sense of responsibility to guard state and commercial secrets... to effectively safeguard national security," the cabinet said in the notice.
The body could be similar to Australia's Foreign Investment Review Board (FIRB), which has held sway over dozens of planned Chinese investments into resources sector in Australia, and which can block deals it deems not to be in the national interest.
The FIRB advises Australia's treasurer, who has the final say. In 2009, the state-owned China Non-Ferrous Metal Mining (Group) Co dropped a $400 million bid for 50.6 percent of Lynas Corp , owner of the world's richest deposit of rare earth minerals, saying the conditions set by the FIRB were too stiff.
Earlier in the same year, Treasurer Wayne Swan forced Chinese metals group Minmetals to withdraw a $1.7 billion bid for OZ Minerals until it revised the deal to exclude a mine situated in a restricted weapons testing area.(Reporting by Zhou Xin and Tom Miles, editing by Miral Fahmy,sourced:reuters)
Wednesday, February 9, 2011
Deals of the day -- mergers and acquisitions
Wed Feb 9, 2011 10:30am GMT
Feb 9 (Reuters) - The following bids, mergers, acquisitions and disposals involving European, U.S. and Asian companies were reported by 1000 GMT on Wednesday.
(For Reuters columns on deals, click on
** The London Stock Exchange (LSE.L: Quote) is to buy the owner of the Toronto Stock Exchange TMX Group (X.TO: Quote) in an all share deal that will create a mining-dominant exchange at a time of rising commodity prices.
** Millhouse LLC, the investment company of Russian billionaire Roman Abramovich, said on Wednesday it has sold a 25 percent stake in the country's main state-run television channel to the National Media Group. The price of the sale of the stake in Channel One was not disclosed, but business daily Kommersant reported the group paid Millhouse $150 million.
** CSN (CSNA3.SA: Quote), Brazil's largest diversified steelmaking group, has raised its stake in Australian miner Riversdale (RIV.AX: Quote) which is subject to a $3.9 billion takeover bid from global miner Rio Tinto (RIO.AX: Quote) (RIO.L: Quote). To read more, please double click on
** Australia's Centro Properties Group (CNP.AX: Quote) has narrowed down bidders for its $9.5 billion U.S. shopping mall assets to three consortiums, including private equity firm Blackstone Group (BX.N: Quote), a source said.
** Billionaire investor Wilbur Ross is considering joining in an effort to buy oil and gas company Exco Resources Inc (XCO.N: Quote), according to a regulatory filing.
** Footwear retailer DSW Inc (DSW.N: Quote) said it agreed to merge with its largest shareholder Retail Ventures Inc (RVI.N: Quote) in an all-stock deal, and raised its full-year outlook.(By Aditi Sharma,Bangalore & Tina Kwan, Singapore)
Feb 9 (Reuters) - The following bids, mergers, acquisitions and disposals involving European, U.S. and Asian companies were reported by 1000 GMT on Wednesday.
(For Reuters columns on deals, click on
** The London Stock Exchange (LSE.L: Quote) is to buy the owner of the Toronto Stock Exchange TMX Group (X.TO: Quote) in an all share deal that will create a mining-dominant exchange at a time of rising commodity prices.
** Millhouse LLC, the investment company of Russian billionaire Roman Abramovich, said on Wednesday it has sold a 25 percent stake in the country's main state-run television channel to the National Media Group. The price of the sale of the stake in Channel One was not disclosed, but business daily Kommersant reported the group paid Millhouse $150 million.
** CSN (CSNA3.SA: Quote), Brazil's largest diversified steelmaking group, has raised its stake in Australian miner Riversdale (RIV.AX: Quote) which is subject to a $3.9 billion takeover bid from global miner Rio Tinto (RIO.AX: Quote) (RIO.L: Quote). To read more, please double click on
** Australia's Centro Properties Group (CNP.AX: Quote) has narrowed down bidders for its $9.5 billion U.S. shopping mall assets to three consortiums, including private equity firm Blackstone Group (BX.N: Quote), a source said.
** Billionaire investor Wilbur Ross is considering joining in an effort to buy oil and gas company Exco Resources Inc (XCO.N: Quote), according to a regulatory filing.
** Footwear retailer DSW Inc (DSW.N: Quote) said it agreed to merge with its largest shareholder Retail Ventures Inc (RVI.N: Quote) in an all-stock deal, and raised its full-year outlook.(By Aditi Sharma,Bangalore & Tina Kwan, Singapore)
Subscribe to:
Posts (Atom)
Posts
