Australian miner seeks to block buy by Shougang
Australian iron ore miner Mount Gibson Iron has asked the country's regulators to block the Hong Kong-listed arm of mainland steelmaker Shougang Corp's acquisition of a stake in the company because of questions regarding its relationship with other stakeholders.
Shougang Concord International Enterprises last month bought 156.8 million shares, representing a 19.73 per cent stake, in Mount Gibson from Russia's Metalloinvest for A$408 million (HK$2.89 billion), or A$2.60 a share.
Mount Gibson shares have risen 23 per cent since the January 31 statement, closing yesterday at A$3.22.
'Mount Gibson has applied to the Takeovers Panel seeking a declaration of unacceptable circumstances [and accompanying orders] in relation to the sale of Mount Gibson shares,' the company said in a statement to the Australian stock exchange yesterday.
Shougang Holding (Hong Kong), a wholly owned subsidiary of Shougang Corp, owns a 20 per cent stake in Shougang Concord and 18.05 per cent of Apac Resources, which controls 20.22 per cent of Mount Gibson, according to a Mount Gibson statement on January 31.
Mount Gibson said in January that it was looking into the nature of the relationship between Shougang Concord and Apac.
Should Shougang Concord and Apac be found to be acting together, they would be required to launch a formal takeover bid because the combined stake they hold would exceed 20 per cent and therefore compel a general offer according to Australian corporate law.
Companies can acquire a 3 per cent additional stake every six months in Australia, which explains Apac's current stake of just over 20 per cent.
Shougang Corp, the sixth-largest mainland steelmaker, is the parent company of Shougang Concord and would effectively control Mount Gibson if the transaction is allowed to proceed. Apac is Mount Gibson's largest shareholder.
Mount Gibson has said it was not informed of an intent to make a formal offer by any of the companies.
The move by the two Shougang units was 'in the grey area of the law', said an Australian market observer.
Mount Gibson will have to present clear evidence that the companies are working in concert in order to convince Australia's Takeovers Panel to act.
'They feel they have enough to make an application, but the key is what evidence they have because the panel is not a place to go for a fishing expedition,' said a source.
Australia's Foreign Investment Review Board, which will also have to sign off on the deal, has to approve all stake sales of 15 per cent or more to an overseas company.
Representatives of Mount Gibson and Shougang Concord could not be reached for comment.
Mainland steelmakers and natural resource companies are keen to acquire stakes in iron ore producers to ensure supply.
Shougang Concord bought a 19.73 per cent stake in Mount Gibson for, in A$: $408m