First Quantum to Meet Inmet Investors to Sell $5.1 Billion Bid

First Quantum Minerals Ltd. will meet Inmet Mining Corp. investors to seek to win them over to its C$5.1 billion ($5.2 billion) takeover offer for the company after the target’s management this week rejected the approach.

“We caution you against relying upon the flawed analysis and recommendation provided to you by the Inmet board and we encourage you instead to judge the merits of our offer for yourselves,” First Quantum said today in an open letter to Inmet shareholders. “The Inmet board should talk to us.”

First Quantum will meet investors in Toronto on Jan. 28 and 29, President Clive Newall said in an interview. “Support of Inmet shareholders for our offer will seal this deal,” he said.

Inmet said on Jan. 22 it was talking to parties about other deals and recommended shareholders reject the C$72-a-share offer as undervalued. First Quantum lacks the experience necessary to develop a mine the size of Inmet’s Cobre Panama site, it said.

David Ryan, a spokesman for Inmet who works for Longview Communications Inc., today declined immediately to comment.

First Quantum, based in Vancouver, plans to gain control of Cobre Panama as part of a combination that would create one of the world’s five-largest copper producers. It said Inmet had failed to identify a “compelling alternative” to the plan.

Inmet was considering many options including the sale of a stake in the development, Chief Executive Officer Jochen Tilk said in a Jan. 22 interview. Inmet said in July the company was looking at selling as much as 20 percent of the project that it says is the world’s largest copper mine under construction.

Access Granted

The offer is the third by First Quantum to be rejected by Toronto-based Inmet since October. The company took its latest cash and stock bid directly to Inmet investors on Jan. 9 before the rejection this week by the target’s board of directors.

“Inmet has granted access to its confidential business information to selected third parties after refusing many times to grant us even limited due diligence access,” First Quantum CEO Philip Pascall said in the letter to Inmet shareholders. “This is particularly disappointing given that we have been very open about the improvements to our plans for the combined entity that due diligence access might help us identify.”

The First Quantum offer requires acceptance by holders of 66 percent of Inmet stock. Leucadia National Corp., which owns a 16 percent stake, said on Jan. 10 that it plans to tender its shares in support of First Quantum’s takeover proposal.

February Deadline

“We are aware that a large number of you have made known to the Inmet board your views on some of these matters,” Pascall said in the letter. “We would urge others among you who share our vision and support the idea of an open dialogue and exchange of information between our two companies to likewise appeal to the Inmet board to engage with us.”

First Quantum’s bid is 36 percent more than Inmet’s closing price on Nov. 27, the day before the two previous unsolicited proposals from First Quantum were rejected. Inmet shareholders have until Feb. 14 to decide whether to back the offer of First Quantum shares, cash, or a combination of both that would result in a total mix of about half paid in shares and half in cash.

“Inmet shareholders will realize an immediate cash premium for some of their shares, effectively crystallizing a portion of the long-term value in the Cobre Panama project and accelerating the delivery of that value,” Pascall said in the letter.

The project, scheduled to be completed in 2016, will cost about $6.2 billion to develop and produce an average 266,000 metric tons of copper annually. The development is 80 percent-owned by Inmet and the rest by Korea Panama Mining Corp., a venture between LS-Nikko Copper Inc. and Korea Resources Corp.

Goldman Sachs Group Inc., Jefferies Group Inc. and Royal Bank of Canada are advising First Quantum. Canadian Imperial Bank of Commerce and law firm Torys LLP are advising Inmet. Scotiabank is financial adviser to the special committee of the Inmet board and Osler, Hoskin & Harcourt LLP its legal counsel.

Before it's here, it's on the Bloomberg Terminal.