China’s Cathay Fortune in $848m takeover bid for Discovery Metals
Cathay Fortune Corp, a private equity firm founded by Chinese billionaire Yu Yong, has made a A$830 million ($848 million) takeover bid for Australian copper producer Discovery Metals. A fund set up by China Development Bank (CDB) is supporting the proposed deal.
The Shanghai-based investor has offered A$1.70 a share in cash - a 17% premium to yesterday's closing price and a 45% premium to the company's volume-weighted average price over the past 20 trading sessions - for the shares in Brisbane-based Discovery it doesn't already own. It currently holds a 13.7% stake.
If the non-binding offer were accepted, Cathay Fortune would gain control of Discovery's copper-silver mine in western Botswana, which has an annual production capacity of 36,000 metric tons and 1.1 million ounces of silver. It would also own 75% of the company, with the remaining share capital held by China-Africa Development Fund, a vehicle established by CDB to further Chinese interests in Africa.
Citigroup has the sales mandate for the transaction.
News of this bid comes after Sprint Capital, a Hong Kong-based PE firm specializing in mining and natural resources, invested A$36 million ($36.4 million) for a 25% stake in Australian mining company Stanmore Coal in June.
A scattering of specialist GPs are emerging in Asia with a view to targeting natural resources that fit in with the region's energy demands, at times co-investing with sovereign wealth funds and corporates.
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