Sinosteel to proceed with Midwest takeover

SYDNEY, Australia — Chinese steelmaker Sinosteel Corp. has taken control of 98 percent of Midwest Corp. and will proceed with compulsory acquisition of the Australian miner, Midwest said.

In a brief statement Wednesday, Midwest said Sinosteel would recommend de-listing the company from the Australian Securities Exchange. The conclusion of the deal marks the first successful hostile takeover of an Australian firm by a Chinese entity.

The exchange released a notice from Sinosteel to Midwest that said the Chinese company had gained a 98.52 interest on Monday, after U.S. hedge fund Harbinger Capital agreed to the Chinese firm's offer for its 15.2 percent stake.

Also Monday, major shareholders Murchison Metals Ltd. and Armadale Offshore Inc. accepted Sinosteel's takeover bid, giving up their 9 percent and 12 percent stakes in Midwest.

Sinosteel launched a $1.36 billion bid for Midwest in December last year, and gained a controlling stake in July.

Sinosteel wants to secure access to Midwest's Australian iron ore assets to serve China's booming steel industry, which is dependent on global mining giants Rio Tinto Ltd. and BHP Billiton Ltd. China's mills have recently had to agree to price increases of up to 96 percent for iron ore from the two.

Midwest operates a mine in Western Australia state with a modest annual production of 1.1 million tons. It is developing a new iron ore project that will produce 16.5 million tons a year, also in Western Australia.

Midwest shares resumed trading Thursday at 6.36 Australian dollars after being placed in a trading halt Tuesday. At midday, the shares were down 1.73 percent to A$6.25.


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