Atlas Iron makes US$825m bid for Giralia

Atlas Iron Ltd has made an offer to purchase Giralia Resources Ltd for A$828 million (US$825 million).

Giralia Directors have unanimously recommended that shareholders accept the offer in the absence of a superior proposal. Atlas has entered into pre-bid acceptance agreements with all board members (representing approximately 7.5% of the shares on issue).

Shareholders will have two alternatives, either a straight share swap of 1.5 Atlas shares for each Giralia share, or 1.33 Atlas shares plus A$0.50/share in cash.

The implied offer price of A$4.57/share represents a 53% premium to the closing price on December 20. The combined company would have a market capitalisation of approximately A$2.5 billion.

Atlas says there is potential to combine its 70%-owned Mt Webber iron-ore project with Giralia’s 75%-owned Dalton’s project into one 80Mt deposit. In addition there is also potential for Giralia’s McPhee Creek project to form part of an expanded 20Mt/y Turner Rive Hub facility, according to the companies.

The combined company would have 602Mt of direct shipping ore (DSO) resources plus addition targets. The two companies believe that merged production rates from the North Pilbara could reach 22Mt/y by 2015.

David Flanagan, managing director of Atlas said: “The two companies have deposits that either join or are very close to each other at Mt Webber, McPhee Creek, Beebyn Range and Western Creek. This merger is a great way to grow production, reduce operating costs, maximise cash flows and deliver significant value for all shareholders.”