The battle for control of Midwest is heating up with Sinosteel boosting its stake again to 33% and firing off a big moan to the Takeovers Panel about the way US hedge fund, Harbinger acquired an 18% stake in Midwest.
If Sinosteel can neutralise the Harbinger stake, it will be home and hosed and all but in control of Midwest, thanks mostly to a group of mystery Malaysian business people who have accepted the $6.38 offer and left millions of dollars of easy profits on the table.
Those lowball acceptances don’t look good and raise all sorts of questions about whether there is any information about the ownership of the shares and the identity of the owners that the local market hasn’t been told.
But judging from the way the share prices for Midwest and Murchison moved yesterday after Sinosteel’s two announcements, the game is over.
It makes a mockery of the ‘Merger Update‘ from Murchison .
Midwest shares fell 31c to $6.41, just above the $6.38 offer from Sinosteel while Murchison shares fell 31c to $3.80.
In its second substantial shareholder notice in as many days, Sinosteel said yesterday it now had a voting stake of 33.82% in Midwest.
Wednesday, Sinosteel said it had raised its stake in Midwest to 28.37%, from 19.89% previously.
The notice emerged after the update from Murchison
In it Murchison said it was still confident of gaining the necessary approvals for the implementation of its potential merger with Midwest.
"While were are obviously disappointed that a major Midwest shareholder has chosen to accept Sinosteel’s offer at substantially below the prevailing market price, as far as we are concerned, we are full steam ahead on the implementation of the merger,” Murchison chairman Paul Kopejka said in the statement.
Sinosteel declared its $6.38-a-share offer final and unconditional last week after Midwest agreed to merge with Murchison to form a $3 billion-plus entity.
Midwest has maintained its recommendation of the Sinosteel offer, while also agreeing to the Murchison proposal based on an "initial assessment”.
Midwest’s board has recommended shareholders accept Sinosteel’s $1.36 billion takeover offer, which closes on June 13 (today week).
Murchison said in yesterday’s statement that detailed legal and financial work on its proposal was under way.
"As there are no longer conditions to the Sinosteel takeover offer for Midwest, there is now no impediment to the execution of a binding Merger Implementation Agreement (MIA) for the merger between Murchison and Midwest,” Murchison said.
The formal MIA is expected to be finalised and signed soon, it claimed, and work was also advancing on the formal disclosure documents required for the Murchison Scheme of Arrangement.
It will be all to no avail, judging by the way Sinosteel is building up its stake. It had an acceptance covering 11.67 million shares. Was this one of those mystery Malaysian shareholders? Certainly Wednesday’s big acceptor was a company called Vital Rays Investments. It left more than $5 million on the table, yesterday’s left around $2 million of profit on the table before the MIS share price dropped.
To add to the pressure, Sinosteel has applied to the Takeovers Panel seeking interim orders preventing entities associated with US investment Harbinger Capital from buying any more Midwest shares.
Sinosteel is claiming that Harbinger’s acquisition of a stake in Midwest was in breach of the Foreign Acquisitions and Takeovers Act (FATA). Harbinger has around 9.1% of Midwest and could be a major blocking stake
It also wants Midwest shares acquired in breach of the FATA to be vested in the Australian Securities and Investments Commission (ASIC) for sale.(As it would).
Sinosteel has also claimed that inadequate substantial shareholder notices had been issued in relation to Harbinger’s investment in Midwest.
