Fortescue Metals Group (FMG) has acquired a 15 per cent stake in Atlas Iron, a move that impacts Mineral Resources’ (MinRes) $280 million takeover bid for the iron ore company.
The agreement sees Fortescue purchase the stake at 4 cents per share, giving it a 15 per cent interest in Atlas. In addition, FMG has an economic interest through a cash settled swap relating to notional shares equivalent to 4.9 per cent of Atlas’ shares..
Fortescue’s share acquisition in Atlas is a blow for MinRes, as the Pilbara iron ore major does not intend to support its proposed takeover under its current terms.
MinRes announced the offer in April, which Atlas chairman Eugene Davis recommended shareholders to approve given its “attractive premium” of 59 per cent on Atlas’ last trading price before the offer was announced.
MinRes boss Chris Ellison responded to shareholder criticism during a media conference call in April, stating that Atlas had been trading at a loss for the past three months.
Ellison added that he didn’t “see iron ore doing anything differently in the next six to 12 months. If they continually lose money, they have to draw a line in the sand.”
The MinRes deal had been scheduled for completion by August.