Atlas backs Rinehart bid

Hancock Prospecting $390m trumps rival’s offer

ATLAS Iron’s board has backed a takeover bid by billionaire Gina Rinehart (pictured) after rival bidder Mineral Resources pulled out of contention.

The board is now recommending shareholders accept Ms Rinehart’s all-cash bid, which values the junior miner at $390 million and trumped the $280 million all-scrip offer made by Mineral Resources in April.

Atlas had asked Mineral Resources to respond to the larger bid, which came from a subsidiary of Ms Rinehart’s Hancock Prospecting, but the ASX-listed mid-tier miner declined to do so by the deadline yesterday.

“A majority of the Atlas board has now withdrawn its recommendation of the MinRes scheme, and recommends that Atlas shareholders accept the Hancock Offer, in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the Hancock offer is fair and reasonable to Atlas shareholders,” Atlas said in a statement yesterday. Atlas will have to pay Mineral Resources a $3.12 million break fee.

When the Hancock offer was made earlier this week, the Atlas board said in a statement to the ASX that it had “assessed the Hancock offer, and has determined that it could be expected to lead to a superior proposal when compared to the Mineral Resources Limited scheme proposal”.

At that stage Atlas Iron said its recommendation in favour of the Mineral Resources proposal would stand.

The offer from Hancock Prospecting’s Redstone represents a 44 per cent premium on the Atlas stock value before Ms Hancock and Andrew Forrest’s Fortescue Metals Group each took a near-20 per cent stake in Atlas earlier this month, apparently in response to the bid from Mineral Resources.

Announcing its increased shareholding on June 7, Fortescue said it did not intend to support the takeover offer by Mineral Resources, but gave no indication it would launch a rival bid.

Atlas’ assets include a stake in a joint venture that holds rights to potentially valuable undeveloped port capacity in Port Hedland.

UBS analysts have suggested that this asset may have been the focus of Fortescue’s interest.

The Western Australian Government has said any development application would be judged on its merit as the berths were set aside for junior miners, which could limit Hancock and Fortescue.