Atlas Iron has received a $390 million off-market takeover bid from Redstone Corporation, a subsidiary of Gina Rinehart’s Hancock Prospecting.
The 4.2 cent a share all-cash offer values the Western Australian iron ore junior at $390 million, a substantial improvement on the $280 million all-scrip bid made by Mineral Resources (MinRes) in April.
Redstone’s directors consider that the all-cash offer, with its premium and low conditionality, represents a “significantly superior proposition” to the MinRes offer and should be viewed as a compelling opportunity.
Hancock executive director Tad Watroba said Atlas’ assets offered potential long-term benefits alongside other assets in Hancock’s portfolio.
“There is potential to unlock value through the future development of Atlas resources as part of our wider system of operations,” Watroba said.
“If we obtain control of Atlas, we intend to conduct a strategic review to better understand the most appropriate time and means to develop and integrate Atlas into the existing operations of the Hancock Group.”
Atlas Iron’s board has advised shareholders to take no action in relation to the Hancock offer, which will open in two weeks.
The board plans to consider the impact of the Hancock offer on the MinRes bid, including any rights there are to match the latest proposal.
MinRes’ offer for Atlas was already looking shaky after Hancock and Fortescue Metals Group both acquired 19.9 per cent stakes in the junior iron ore miner through share purchases this month.
Atlas’ rights to undeveloped port capacity at Port Hedland are believed to be a key reason behind the heightened interest in the target.
However, the Western Australian Government last week said any development of this port capacity would likely be reserved for junior companies, potentially ruling out Hancock and Fortescue.