Shares in Sundance Resources have shot up after it accepted a reduced takeover offer from China’s Hanlong Mining.
Sundance today said it had accepted a fresh $1.37 billion offer from Hanlong, which reduced its original offer by about one fifth.
Shares in the iron ore hopeful soared four cents to 37.5 cents shortly after they came out of a trading halt at 9.00am before closing up 2.5 cents, 7.46 per cent, at 35 cents.
Hanlong sliced its offer from 57 cents a share to 45 cents after Chinese regulators ordered the move following a fall in iron ore prices.
Sundance chairman George Jones said the company had decided to accept the reduced offer after extensive talks with Hanlong and after considering a range of factors, including changes in financial markets since the initial offer was made in October 2011.
"The board has reviewed in detail all the courses open to it,” Mr Jones said in a statement.
"The board has concluded that, from those available choices, a revised scheme price which maintains the revised SIA (Scheme Implementation Agreement) is currently in the best interests of shareholders."
Sundance said it had stipulated, and Hanlong had agreed to, several amendments in the revised SIA to help provide certainty for shareholders that its Chinese suitor would fulfil its obligations by the end of December.
Sundance said Hanlong had committed to paying a break fee of about $14 million if it tries to further reduce its offer price and Sundance terminates the deal.
All exclusivity provisions have also been removed.Sundance said Hanlong was confident that a final decision on the deal by its financial backer, the
Chinese Development Bank, would be made in time to meet an end of December completion date.The deal also needs final regulatory approval from China’s National Development and Reform Commission.
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