Equinox moves for Lundin in $4.8B bid

Equinox Minerals Limited has confirmed that it will make an offer to acquire Vancouver-based Lundin Mining Corporation for $4.8 billion in cash and shares.

The company said late Sunday that Lundin shareholders can choose between $8.10 per share in cash, which is a 26 per cent premium to Friday's closing price of $6.45, or 1.2903 Equinox shares plus $0.01 for each Lundin share.

Lundin said earlier in the day it had been advised that Equinox intended to make an unsolicited take-over bid before the markets opened on Monday, but it wasn't aware of the terms of the bid.

UBS analyst Onno Rutten said the bid was a surprise, but Lundin's "assets are relatively attractive from a strategic perspective, due to the fairly long mine lives and growth opportunities."

Equinox, an international mining company listed on the Toronto and Australian stock exchanges, said in a news release that the offer is consistent with its strategy of becoming the world's leading pure copper growth company.

The news comes less than a month after Lundin signed a deal to merge with Inmet Mining Corp. on an equals basis to create Symterra Corp., with shareholder votes scheduled for March 14.

Rutten noted that Inmet and its stock-swap merger deal may have a difficult time topping the Equinox takeover offer of cash and stock valued at about $4.8 billion. The Inmet deal comes with a $120 million break fee and requires the approval of two-thirds of the shareholders of both companies.

"Inmet's ability to exercise its right to match the Equinox offer could, in our view, be hampered by its inability to offer a meaningful higher equity ratio (to prevent a reverse takeover situation) and its inability to offer meaningful cash without jeopardizing a construction start at Cobre Panama," Rutten wrote in a report to clients.

Under the original Inmet deal, Inmet shareholders would hold 53 per cent of the stock in the new company, with Lundin shareholders holding the remaining 47 per cent.

Equinox President and CEO Craig Williams called the offer superior to the "nil-premium merger" proposed between Lundin and Inmet.

"We also believe that our offer presents an attractive option for Lundin shareholders to elect to receive cash or retain exposure to what we believe would be one of the strongest and lowest risk production and growth profiles in the copper sector today."

Equinox's main asset is the 100 per cent owned Lumwana Copper Mine in Zambia, one of the largest new copper mines to be developed globally over the last few years.

Lundin has operations in Portugal, Spain and Sweden, producing copper, nickel, lead and zinc as well as an equity stake in the Tenke Fungurume copper-cobalt project in the Democratic Republic of Congo.

Lundin urged shareholders not to take any action in response to the bid until the board can come up with a recommendation. Lundin's stock was ahead roughly 20 per cent or $1.30 to $7.75 shortly after the market opened on Monday as investors digested the offer.