Noranda Inc. says China Minmetals' $6B takeover talks no longer exclusive
Nancy Carr
Canadian Press
Tuesday, November 16, 2004
TORONTO (CP) - The $6-billion takeover of mining Noranda Inc. by China Minmetals was thrown into doubt Tuesday after the Toronto company said it is no longer in exclusive talks with the Asian government firm.
After seven weeks of exclusive talks, Noranda spokesman Denis Couture said Minmetals hasn't "made a bid that was acceptable to the board of directors of Noranda." He would not say whether a formal bid was ever proposed for Noranda, which is one of Canada's biggest and best-known miners and has a stock market valuation of more than $6 billion.
"It's not that clear cut. Before you formalize something you raise it with people, and if you're told, 'No, don't waste your time,' you don't do it," said Couture, hinting at an unofficial bid from Minmetals.
Couture said the Chinese government-run company had wanted to extend its exclusive negotiating period with Noranda for a second time, but the miner refused.
"What is relevant is the fact that after seven weeks of exclusive negotiations and discussions that made some quite substantial progress, we were not able to clinch a deal," Couture said.
"We will continue our discussions with China Minmetals, the difference being that now we will be in a position to pursue other interests. We'll be able to respond to the advances of other parties or solicit other parties, and even look at opportunities on a stand-alone basis."
He would not say whether Noranda was currently in talks with other potential bidders.
He also refused to elaborate on the possibility of the company buying back its own shares from Brascan Corp. (TSX:BNN.A), which owns 42 per cent of Noranda and is looking to divest itself of its mining interest.
Noranda announced on Sept. 24 that it was in negotiations to sell all of the company's shares to Minmetals. Noranda first announced in June, after years of speculation, that it was the subject of takeover interest.
If completed, the acquisition by Minmetals would be the biggest Chinese investment ever made in Canada.
"For our part, we remain committed to completing the acquisition," Minmetals spokesman David Weiner said Tuesday.
"Minmetals has been doing business in the West for over a decade, but this is a complex transaction involving two companies in a number of countries and complex transactions by their nature, in our experience, take time to execute."
One analyst, who requested anonymity, said Brascan is likely pushing to sell its stake in Noranda as soon as possible and that Minmetals was taking too long.
"My feeling was that Brascan wanted this to move," the analyst said.
The analyst said the end of exclusive talks with Minmetals reduces the likelihood Noranda will get the offer it wants, "unless Noranda does have another very serious suitor that has indicated that maybe they would in fact pay a higher price."
Noranda shareholders seemed optimistic a better bid will emerge. The stock gained almost four per cent Tuesday, after recent drops in value since Noranda indicated Minmetals was willing to pay a "small premium" to the shares in the takeover.
"That could be some potential rebound happening (in the stock) because . . . what appeared to be a locked up done deal is not that way," said Greg Barnes, an analyst with Canaccord Capital in Toronto.
Shares in Noranda (TSX:NRD), which produces nickel and copper, and employs 15,000 people in 18 countries, closed down 80 cents, or 3.9 per cent, at $21.30 Tuesday on the Toronto stock market.
Victor Lazarovici, an analyst with BMO Nesbitt Burns in New York, said on specialty business channel ROBTv that Noranda has a good chance of buying out Brascan's holdings in the mining company on its own.
"I think it's quite possible that Noranda goes it alone," Lazarovici said.
"I think the current negotiations really stem from statements made by Noranda's largest shareholder, Brascan, that they wanted to exit their position, and with the large block of stock available, I think other mining companies looked at it as an opportunity to buy and approached Noranda."
Barnes agreed that while numerous companies were rumoured to have been bidding for Noranda over the summer - most notably Brazilian miner Companhia Vale do Rio Doce, or CVRD - their focus may have shifted.
"A lot of attention globally on the mining scene has switched to Australia," Barnes said, pointing to reports Tuesday that CVRD was to make a bid for Melbourne-based WMC Resources Ltd.
CVRD spokesman Rafael Campos said from Rio de Janeiro on Tuesday that his company is "always open to discussions with any company regarding any asset."
Other possible bidders include Canadian miner Inco Ltd. (TSX:N) and Australian miner BHP Billiton, which bills itself as the world's largest resource company.
© The Canadian Press 2004
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