South African coal producer Exxaro Resources today launched a A$338-million bid for African Iron, in order to get hold of the Australian-listed company's Mayoko iron ore project in the Republic of Congo.
Pretoria-based Exxaro will pay A$0.57 cents a share to Perth-based African Iron, a premium of 43 per cent to the Australian company's last closing price on 9 January.
The offer will rise to A$0.57 per share if Exxaro gets backing from African Iron investors owning at least 75 per cent of its shares. Exxaro is also making a bid for listed options in the iron ore miner.
Exxaro has already received approvals from the Australia's Foreign Investment Review Board and regulators from South African.
African Iron's top shareholder, Cape Lambert Resources, which owns 19.99 per cent stake has agreed to the deal, while Equatorial Resources, which owns the neighbouring Mayoko-Moussondji project and 20 per of Exxaro has welcomed the transaction but did not say it will tender its shares to the offer.
The acquisition will give Exxaro ownership of African Iron's Mayoko iron ore project, which is expected to start production in 2013.