Sinosteel wins 97pc stake in Midwest

Sinosteel Corp is set to delist Perth-based iron ore miner Midwest Corp from the Australian bourse after winning a 97 per cent stake in the company to successfully close its A$1.36 billion (HK$8.59 billion) buyout bid.

In the first hostile takeover of a foreign company by a state-owned mainland firm, Sinosteel said yesterday in an Australian Stock Exchange filing that it had lifted its stake in the mining company to 82.66 per cent after former Midwest director David Law Tien-seng agreed to sell his 12 per cent stake.

The formal acceptance by Mr Law left only one other major shareholder - United States hedge fund Harbinger Capital, which owns a 15 per cent stake in Midwest - standing between Sinosteel and the 90 per cent stake it needed to force out the remaining minority shareholders.

That hurdle now appears to have been cleared.

'Harbinger is believed to have accepted the offer,' a source close to the deal said yesterday, the day Sinosteel had set as the final deadline for acceptance of its A$6.38-per-share cash offer.

Sinosteel's acquisition of Midwest came amid broader moves by China, the world's largest steel producing country, to break its dependence on iron-ore producing heavyweights Rio Tinto, BHP Billiton and Vale.

Yesterday's developments conclude a six-month saga that began on March 14, when Beijing-based Sinosteel launched an unsolicited takeover bid priced at A$5.60 per share that failed to win support from Midwest's management. It sweetened the offer 14 per cent to A$6.38 on April 29 and subsequently won management support.