Sterlite likely to slash Asarco bid to $1.5 billion
03 March 2009
London-listed Vedanta Group subsidiary Sterlite Industries is planning to submit a new bid for bankrupt US copper miner Asarco at almost half the $2.6 billion it offered 10 months ago.
Media reports say that the new bid ranges from $1.4 billion to $1.5 billion with Sterlite reportedly making installment payments over a five-year period. However, the initial payment is expected to be half of the purchase price.
If the deal goes through, fifth place Sterlite will become the world's third largest copper miner with an annual capacity of 650,000 tonnes and proven copper reserves of 5 million tonnes.
The meltdown in copper prices is believed to be the main reason for cutting the acquisition price, analysts opined yesterday.
Analysts predict that global copper prices will fall below $3,000 per tonne, and could even plunge to $2,500 in 2009. Price of copper in 2007 was around $6,250 per tonne due to stabilisation of supply compared to 2006.
Sterlite and Asarco's parent Grupo Mexico have been in negotiations over the deal for months.