Bradken Ltd. rejected a A$428 million ($324 million) offer from Koch Industries Inc. and Pacific Equity Partners, saying it didn’t reflect the fair value of the Australian mining equipment supplier.
Bradken received the unsolicited proposal of A$2.50 a share in cash on Wednesday, the Newcastle, Australia-based company said in a statement. The offer, a 29 premium to Wednesday’s closing price of A$1.94, was subject to conditions including financial due diligence. The board “determined that it does not represent fair value” and would not engage further with the suitors, Bradken said.
Pacific Equity Partners, a Sydney-based buyout firm, and Bain Capital LLC made a non-binding offer of A$5.10 a share on Dec. 5, valuing Bradken at A$731 million, the company said at the time. That proposal was reduced from an earlier offer of A$6.00 a share in August.
Mining companies and the services businesses that supply them have been hit by plunging commodity prices as China’s materials-intensive economy slows. A Bloomberg Commodity Index of 22 raw materials hit a 12-year low last month.
The proposal offers “compelling value” and both equity and debt funding commitments to finance the transaction are in place, Koch and Pacific Equity said in an e-mailed statement. Equity would be provided equally by the two parties and so-called confirmatory due diligence could be completed “in a matter of days,” the suitors said.
Bradken shares gained 18 percent to close at A$2.29 in Sydney, the biggest one-day gain since the previous approach was made public on Dec. 5.
Bradken Managing Director Brian Hodges wasn’t immediately available to comment.
Closely-held Koch Industries, controlled by billionaire brothers Charles and David Koch, has businesses across refining, chemicals, consumer products, minerals and commodity trading and is one of the largest private companies in North America, according to its website. It has 100,000 employees in 60 countries and has made $70 billion of acquisitions and capital spending since 2003.