Shares in resources and steel company Arrium have shot up by nearly 25 per cent after it revealed it had rejected a $1 billion takeover offer.
Arrium said the 75 cents a a share takeover offer undervalued the company and carried significant risk because it was highly conditional.
Today the shares closed up 24.77 per cent, 13.5 cents, to 68 cents.
The company received the offer after the market closed on Friday, from an Asian consortium including Singapore listed Noble Group, Korean steel giant POSCO, National Pension Service of Korea, Korea Investment Corporation and Korea Finance Corporation.
Shares in Arrium, which was formerly OneSteel, were in a trading halt at 54.5 cents for the first hour of trade, before shooting up by 13.5 cents, or 24.8 per cent, to 68 cents at 9.30am.
Arrium said in its statement that it had met with the consortium's representatives and advisers and carefully considered the proposal.
While the offer represented a 37.6 per cent premium to Friday's closing share price, the indicative price had a premium of only 8 per cent over the three-month volume weighted average price of Arrium's shares.
Acquiring Arrium would give POSCO greater security of supply through its iron ore mines.
It is a major partner in Gina Rinehart's Roy Hill iron ore project, which is not yet in production.
Arrium has been praised for growing its profitable iron ore mines and mining consumables divisions in recent year, an advantage rival steelmaker BlueScope Steel does not enjoy.
However plummeting iron ore prices this year have raised worries about Arrium's ability to service more than $2.1 billion in debt.
Arrium chairman Peter Smedley said the board believed that the proposal undervalued the company was not in the best interests of shareholders.
"Arrium has an attractive portfolio of businesses and is poised for significant growth," he said in a statement.
"This opportunistic approach comes at a time of volatile commodity prices and market conditions."
Arrium Mining currently exports approximately six million tonnes of hematite ore a year to China from its Middleback Ranges mining operation in South Australia.