Xstrata Extends Offer for Sphere

By Joel ScanlonNov 28 2010

Xstrata has extended its AUD$515 million offer to Australian iron ore company Sphere by three weeks to the date December 17. The wholly owned subsidiary company of Xstrata known as Sidero already holds 73.1% of the shares in Sphere when the offer closed on November 24.

The Swiss mining giant was preferred by the board of directors of Sphere Minerlas as compared to a rival refinancing proposal which came from Sin Tang Developments. Sin Tang also happened to be Sphere’s second largest shareholder as it holds 15% stake in the company.

Had they accepted the rival proposal from Singapore based company they would have increased their stake in Sphere Minerals to 30%. However the board of directors at Sphere Minerals urged their shareholders to reject that proposal in favour of Xstrata’s offer via Sidero.

Sidero offered to buy all shares in Sphere it did not already own for $2.50 per share on August 24, then increased its offer to $3 per share in light of Sin Tang’s offer. Now that its interest in Sphere Minerals has crossed 50% under Australian law it automatically extends the initial acceptance period by 14 days.