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A hostile takeover bid for Inmet Mining Corp. is looking ever more likely to succeed as the deadline approaches for shareholders to vote on the $5.1-billion offer, as the odds of a counter-bid ebb along with softening copper prices.
With just a few days to go before the First Quantum Minerals Ltd. bid expires on Feb. 27, and two months after the $72-per-share was made, there are no signs of a rival offer emerging.
Vancouver-based First Quantum began courting Inmet well before that, proposing bids at $62.50 a share and $70 a share in October and November as it pursued Inmet’s massive Cobre Panama project, one of the world’s largest undeveloped copper deposits, amid buoyant prices for the metal.
But copper prices have since retreated along with a less optimistic outlook for demand and big base metals companies appear to have lost their appetite for deal-making amid massive cost overruns.
“I’m still hoping the deal goes through with a premium to the current offer, but it’s looking in this current environment that it might just go through as it is,”said Terry Thib, a portfolio manager with Norrep Funds in Toronto, which holds Inmet shares.
Inmet Mining shares closed trading at $67.41 on Friday, more than 6-per-cent below the cash and stock offer price – suggesting the market is not expecting a higher bid to emerge for Inmet. At the same time, there has been substantial shorting of First Quantum stock.
“We are increasingly of the view that the current First Quantum offer will be the final one, and that a competing bid will not emerge,” Alex Terentiew, an analyst with Raymond James Ltd. in Toronto, wrote in a research note last week.
He said First Quantum may be facing investor pressure not to increase its offer after other miners announced a string of multibillion-dollar writedowns in recent weeks on assets acquired in recent years.
Analysts and investors are speculating that a friendly deal could now emerge between the parties, with several saying the First Quantum and Inmet boards have met.
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