Cathay Fortune bids for Discovery Metals
Cathay Fortune, a Chinese private equity firm, has offered A$830 million (HK$6.58 billion) to take control of Discovery Metals, an Australian copper producer with mines in Botswana.
Cathay Fortune, founded by billionaire Yu Yong, offered A$1.70 a share in cash for the shares in Discovery it did not already own, the Shanghai-based company said yesterday.
The offer represented a 16.8 per cent premium to Wednesday's closing price. Cathay Fortune holds 13.7 per cent of Discovery.
Buying Discovery would give Cathay Fortune, which manages an investment portfolio of US$3 billion, a copper-silver mine in Botswana that first produced copper in July with a production capacity of 36,000 tonnes and 1.1 million ounces of silver annually.
Falling asset values have triggered renewed takeover interest in the mining sector after commodity prices declined.
"We look forward to engaging with the board of directors of Discovery Metals to progress our proposal," Yu said.
He added that Cathay was "enthusiastic" about working with the board to develop and provide funding for the Botswana copper project.
Cathay Fortune would own 75 per cent of the company if a deal was completed, with the remainder held by China-Africa Development Fund, according to a company statement. Citigroup is advising Cathay Fortune on the deal.
Brisbane-based Discovery Metals rose as much as 7 per cent to A$1.455 on Wednesday. The company halted its shares from trading yesterday ahead of a statement on a takeover proposal, it said.
Paul Fulton, the company secretary at Discovery Metals, was not available when contacted for comment yesterday.