Jubilee Mines (JBM) rose by as much as 42% today after Swiss mining giant Xstrata made a $3.1 billion bid for the Western Australian mining and minerals exploration company.
Xstrata, which is seeking to expand its nickel business worldwide, has offered 23 dollars cash per Jubilee share, representing a 35 percent premium to Jubilee's closing price on Friday.
The Jubilee Board of Directors has unanimously recommended that shareholders accept Xstrata's Offer in the absence of a superior offer.
As part of the deal, the Jubilee directors and senior management have pledged to sell their combined 17.5 per cent stake to Xstrata even if a higher offer emerges.
"This is a great offer to be able to recommend to Jubilee shareholders and an important milestone for Jubilee, representing the culmination of 20 years of exploration success, growth and development," said Jubilee Executive Chairman Kerry Harmanis.
"The Jubilee Directors believe that Xstrata is well placed to continue Jubilee's development, and that Jubilee's employees, suppliers, contractors and other stakeholders will benefit from Xstrata's capital, expertise and significant nickel mining and marketing capabilities."
Xstrata and Jubilee have entered into a Bidding Agreement, which includes customary deal protection including traditional "no shop" and "no talk" clauses, and the payment to Xstrata of a break fee of A$31.3 million in certain circumstances where a deal is not completed.
If successful, this deal will mark Xstrata's first move into Australia nickel mining.
Jubilees' prime assets include its Cosmos Nickel Project as well as a number of other projects in development and exploration projects, all in Western Australia.
"The combination of Jubilee with Xstrata Nickel marks an exciting step in our strategy to create a world-class nickel business, and represents our entry into Western Australia, one of the world's great nickel provinces, " said Xstrata CEO, Ian Pearce.
"Jubilee offers Xstrata Nickel immediate access to additional production, geographic diversification and introduces substantial near term growth potential into its portfolio."
"We look forward to optimizing Jubilee's growth potential, creating additional employment opportunities and increasing capital and community investment in the region, for the benefit of shareholders, employees and the stakeholders in Jubilee's current and future operations."
Mr Pearce said Xstrata will establish a regional base in Perth for its activities and future growth in Western Australia, which is to be managed by existing members of Jubilee.
Xstrata's offer is conditional upon 90% acceptance and approval from Australian regulators.
Xstrata expects to dispatch its Bidder's Statement to all Jubilee shareholders by the end of November, with the offer to be available for a month subsequent.
Jubilee closed the day at $23.81, up by 39%. On Friday, the nickel miner closed at $17.10.
