Meijin Energy Group Co., China’s largest private coke producer, offered A$435 million ($455 million) for Western Desert Resources Ltd. (WDR), spurring the biggest jump in the Australian company’s stock in four months.
The cash bid by the Qingxu, Shanxi-based producer at A$1.08 a share represents a 50 percent premium to its 30-day share price average, Western Desert said today in a statement. The offer is 26 percent higher than its last closing price of 85.5 Australian cents on Sept. 14.
Acquiring Western Desert would give Meijin iron ore, gold, copper and uranium deposits that the Adelaide, South Australia- based company explores in the Northern Territory. Western Desert climbed as much as 17 percent to A$1.0, set for the biggest jump in Sydney trading since May 17. The stock traded at 95.5 cents as of 3:30 p.m. local time.
Meijin Energy has a capacity to produce 6.3 million tons of a year of coke according to its website. Coke is produce from metallurgical coal and used for steelmaking. Its operations span coal mining, coke production and steelmaking with branches in Beijing, Shanghai, Tianjin, Tangshan and Northern East China, Western Desert said. Meijin’s Australian unit, MacMines, is developing the 4.2 billion ton Galilee Basin coal deposit in Queensland state, it said.
“This offer from a major Chinese corporation represents excellent value for shareholders,” Western Desert Chairman Rick Allert said in today’s statement.
The board of directors will appoint an independent expert to assess Meijin’s proposal before recommending that shareholders accept the offer in the absence of a higher bid, the company said. It needs government and regulatory approvals in both countries.
To contact the reporter on this story: Soraya Permatasari in Melbourne at email@example.com