Swiss mining group Xstrata offered A$960 million ($842 million) for Australian thermal coal producer Resource Pacific on Wednesday, rivaling an offer last month by New Hope Corp.
Xstrata also agreed with Japan's Marubeni, Resource Pacific's biggest shareholder, to buy Marubeni's stake in Resource Pacific, giving it a total 15.6 percent stake in the New South Wales-based producer.
"We've tried to put a price on the table that we can finish this quickly," Xstrata Coal Chief Executive Peter Coates told a briefing.
However, Resource Pacific advised shareholders to take no action on the all-cash offer, which was pitched at A$2.85 a share. Resource Pacific stock added 4.1 percent to A$3.03, a six percent premium to the bid price.
Resource Pacific operates the Newpac underground semi-soft coking coal and thermal coal mine in the Hunter Valley of New South Wales.
Xstrata's offer trumps one by New Hope, which is offering 0.94 of its own shares for every Resource Pacific share. The New Hope deal is worth about A$2.40 per Resource Pacific share or around A$808 million.
A New Hope spokesman said it was reviewing its options following the Xstrata offer.
Shares in Resource Pacific leapt more than 20 percent Tuesday amid speculation that a second suitor was readying a bid.
Resource Pacific managing director Paul Jury said the company would consider Xstrata's unsolicited overture and make a formal recommendation in due course. "We see a lot of value in our Newpac, Hunter Valley mine and any shareholder who exits now will lose the opportunity to benefit from this value by remaining a shareholder or accepting any higher offer that may emerge," Jury said in a statement.
It is clear Xstrata understands that Newpac, which is the last remaining high quality semisoft coking coal resource in New South Wales, is a very valuable asset."
Xstrata's Coates noted Resource Pacific had pitched a rights issue to the market recently at A$1.60 a share. "This company did a rights issue at A$1.60 three or four weeks ago. That's
what they thought the thing was worth, we're offering A$2.85, an enormous premium, a 78 percent premium," Coates said.
Xstrata has been one of the most acquisitive-minded foreign companies in the Australian resources sector since acquiring the MIM Holdings zinc and copper mines in 2003.
In October, it offered A$3.1 billion ($2.8 billion) for Australia's fifth-largest nickel producer Jubilee Mines.
Russia's Norilsk outbid Xstrata earlier this year for another Australia nickel miner Lionore.
Australia's abundance of iron ore, nickel, gold and other minerals is attracting a swelling brigade of overseas investors betting that a global raw materials boom will go on for years.