Grande Cache Coal agrees to $1B takeover
Chinese and Japanese buyers paying in cash
Shares in Calgary-based Grande Cache Coal Corp. soared 68 per cent after it unveiled a deal to be bought by a partnership formed by Chinese and Japanese companies for $1 billion in cash.
Its stock closed up four dollars at $9.87 Monday on the Toronto Stock Exchange.
The coal miner announced the would-be buyers are Winsway Coking Coal Holdings Ltd., listed on the Hong Kong Exchange, and Japanese trading house Marubeni Corp. The offer will require approval from shareholders and regulators.
The offer, made through a numbered company based in Alberta, is worth $10 per common share, a 70 per cent premium Grande Cache's closing price Friday.
Grande Cache said it has agreed not to solicit another offer and will also give the Asian partnership an opportunity to match any competing bids.
"We believe the arrangement is a compelling transaction for Grande Cache Coal's shareholders and recognizes our highly attractive mining operation and the exceptional team," said president and CEO Robert Stan in a release.
"In addition, Marubeni has had a long standing business relationship with the corporation and has a 40-year history with the corporation's mine.
Furthermore, Winsway is one of our main customers for the Chinese market."
A special shareholder vote is expected in January with a closing agreement expected in February.
The transaction is part of a growing trend that has seen companies from Asia, particularly China, South Korea and Japan, acquire mining and other resource companies around the world.
Chinese companies have also helped finance iron ore exploration in northern Quebec as well as oilsands projects in northern Alberta.
In July 2009, China Investment Corp. acquired a stake in Vancouver-based Teck Resources, a major producer of coal used to make steel and copper, for $1.5 billion US.
The Grande Cache deal announced Monday includes a break fee of $50 million, plus $10 million in costs, payable by the company if the deal does not go through under certain circumstances.
The agreement also includes a break fee of $100 million, plus $10 million in costs, payable to Grande Cache under certain circumstances if the sale is not completed.
Winsway is a Hong Kong-listed company that supplies coking coal from around the world to the Chinese steel industry.
Marubeni is one of the largest Japanese trading houses involved in wide range of industries including metals and mineral resources, transportation machinery, energy related commodities, food, textiles, materials, pulp and paper and chemicals.