Norilsk Nickel Acquires LionOre Mining International Ltd. for $6.8 Billion
|Areas||Competition, Antitrust and Foreign Investment, Corporate and Commercial, Mining and Natural Resources, Tax|
Goodmans acted as Canadian counsel to MMC Norilsk Nickel Group (“Norilsk Nickel”) who announced on June 29, 2007 that approximately 90% of the outstanding common shares of LionOre Mining International Ltd. (“LionOre”) had been tendered to Norilsk Nickel in response to its takeover bid. The tendered shares were acquired by Norilsk Nickel in the first week of July in the largest-ever foreign acquisition by a Russian company. Headquartered in Moscow, Russia, Norilsk Nickel is the biggest mining and metals company in Russia and is one of the world's largest producers of nickel, palladium, platinum and copper, with a market capitalization of approximately $40 billion dollars. LionOre is a Canadian-incorporated and Toronto Stock Exchange-listed nickel producer operated largely out of London, with mines in Australia, South Africa and Botswana.
On May 3, 2007, Norilsk Nickel made an initial unsolicited offer for all the issued and outstanding common shares of LionOre at a price of $21.50 in cash per share, for a total cash consideration of $5.3 billion. Norilsk Nickel’s initial offer was in response to the prior offer of Xstrata plc (of Zug, Switzerland) announced on March 23, which had valued LionOre at $18.50 per common share, or $4.6 billion in totals. Norilsk Nickel’s initial offer represented a premium of approximately 16.2% over the Xstrata offer. Xstrata then increased its offer from $18.50 to $25.00 in cash per LionOre common share ($6.2 billion in total) on May 15, 2007, and on May 23, 2007, Norilsk Nickel increased its offer f to $27.50 per LionOre common share ($6.8 billion in total), 10% more than Xstrata’s offer of $25.00 per share.
Following Xstrata’s decision not to match Norilsk Nickel’s offer, LionOre terminated its support agreement with Xstrata and paid Xstrata a cash termination “break fee” of $305 million. On June 24, 2007, LionOre entered into a support agreement with Norilsk Nickel, recommending that its shareholders accept Norilsk Nickel’s offer.