Australian iron ore miner, Sundance Resources yesterday accepted a $1.4-billion takeover offer from Hanlong Mining, 21 per cent lower than the initial offer made by the Chinese company following the global slide of iron ore price.
In July 2011, Hanlong, with an 18.6-per cent stake in Sundance, had offered to buy the remaining shares it does not already own in the Australian miner for A$0.57 a share or A$1.7 billion, a 25-per cent premium to Sundance's closing price of A$0.40 on 16 July 2011.
But due to the global economic turmoil, iron ore prices have fallen by more than 40 per cent since the past 12 months, while Sundance share price has also fallen 40 per cent since July 2011, but rose by 7.5 per cent to A$ 0.36 yesterday following confirmation that the board has accepted the revised offer.
Perth-based Sundance yesterday said that its board has accepted the revised bid of A$0.45 after the Chinese regulator earlier this month approved the takeover on condition that the acquisition price was amended due to a change in market conditions. (See: Australia's Sundance Resources expects Hanlong's offer to be lowered)
The revised offer now values Sundance at A$1.37 billion ($1.43 billion), which is $33 million lower than the previous agreed offer of A$1.7 billion ($1.79 billion).
Sundance chairman, George Jones said the lowered bid price reflected a change in market conditions and a sharp decline in the value of company's shares. He said the board decided to accept the offer after feedback from shareholders.