RECOMMENDED A$2.50 PER SHARE CASH OFFER BY XSTRATA FOR SPHERE MINERALS
· Premium of 73% to the 30-trading day volume weighted average price and 61% over the closing price of A$1.55 per Sphere share on 23 August 2010
· Unanimously recommended by Sphere’s Board of Directors
· Sphere Directors have agreed to sell their shares and options to Xstrata, representing 5.4% of Sphere’s fully diluted share capital
· Xstrata’s offer provides Sphere shareholders with an attractive, risk-free, cash premium for their investment
· Acquisition gives Xstrata exposure to attractive iron ore market through organic growth projects in Mauritania
Xstrata plc (LSE: XTA.L, SWX: XTA.S) and Sphere Minerals Limited (ASX: SPH) ("Sphere") announce that Sidero Pty Limited (ACN 145 740 450) (“Xstrata”), a wholly owned subsidiary of Xstrata plc, and Sphere have entered into an Offer Implementation Agreement for an all-cash offer (the “Offer”) by Xstrata to acquire all of the issued and outstanding shares of Sphere by way of a recommended off-market takeover offer.
Xstrata’s Offer is for A$2.50 per share, valuing Sphere at approximately A$428 million (US$383 million). The Offer represents a 61% premium over the closing price of A$1.55 per Sphere share on the Australian Securities Exchange (the “ASX”) on 23 August 2010 and a 73% premium over the volume weighted average price of Sphere shares over the last 30 trading days on the ASX. The Offer will be financed through Xstrata's existing credit facilities and cash on hand.
Xstrata’s Offer follows extensive consideration by the Sphere Board of the strategic options for Sphere’s projects, including discussions with other parties. The Sphere Board concluded that Xstrata’s Offer represents the best opportunity for Sphere shareholders to maximise the value of their investment.
Each of the Directors of Sphere has agreed to sell all of their Sphere shares and options to Xstrata and no other party, subject to the Offer becoming unconditional, at the Offer price. In total, these agreements represent 5.4% of Sphere's fully diluted shares outstanding.
Sphere is a West-Africa focused iron ore company, with interests in three iron ore projects in
· the large-scale Guelb el Aouj project through a 50/50 joint venture with Société Nationale Industrielle et Minière (SNIM),
· the near-term Askaf project, located 35km south of Guelb el Aouj; and
· the Lebtheinia project, located 90km from the coast.
Alexander Burns, Managing Director, Sphere Minerals Limited., commented:
“Xstrata’s offer provides our shareholders with an attractive cash premium which recognises the significant achievements of our team in developing the Company’s portfolio of iron ore projects over the past ten years. Sphere’s projects have now reached the stage at which they will benefit from the robust financial capacity and support of a major diversified mining group to ensure they reach their full potential, for the benefit of all our stakeholders in
Peter Freyberg, Xstrata Coal Chief Executive, said:
“Xstrata’s acquisition of Sphere will add a range of organic growth projects in iron ore to our portfolio. This includes potential near-term production from the Askaf project and longer term growth potential from the large-scale Guelb El Aouj project in
Xstrata and Sphere have entered into an Offer Implementation Agreement, which includes customary deal protection including traditional “no shop” and “no talk” clauses, and the payment to Xstrata of a break fee of A$4.4 million in certain circumstances where a deal is not completed.