Private Equity News & Analysis

Crosby backs A$540m bid for mining company

The Asian merchant bank has assembled a consortium and teamed with the management of Philippines-focussed mining company Indophil to outbid copper producer Xstrata. Each bidder considers Indophil's Tampkan site in the southern part of the country a gem.

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Hong Kong asset manager Crosby Capital Partners and Pakistani engineering company Alsons Group have partnered with management to make a A$540 million ($516 million; €330 million) bid for copper and gold mining company Indophil.

Tampakan site

The consortium, which includes Indophil chief executive Richard Laufmann, will offer A$1.28 per share in order to counter a A$1 per share offer from copper producer Xstrata. The group will make its offer by way of an off-market bid through a special purpose vehicle.

Indophil’s offer represents a 39.5 percent premium to the company’s six month volume weighted average share price prior to the announcement of the offer. As part of the agreement, Asia-focussed merchant bank and asset manager Crosby has agreed to an A$5 million break-up fee, as well as no-shop and no-talk exclusivity arrangements.

At the center of the bidding war is the Tampakan Copper-Gold Project in the southern Philippines, currently Indophil’s main focus. Indophil owns 34 percent of the project and Xstrata owns the remaining 62.5 percent.

Xstrata has a pre-bid acceptance agreement with the board of Lion Selection, Indophil’s largest shareholder, for 17.76 percent of its 25 percent interest in Indophil, but Lion has the option to withdraw its recommendation if Xstrata does not match the competing bid. Xstrata has said that it will not match the offer at present, given the “significant costs and risks” associated with the project.

“Xstrata is considering its options and will review its position with regard to its offer for Indophil after the Lion Selection general meeting,” the firm said in a statement.

Indophil’s board has unanimously recommended the Laufmann consortium’s offer to shareholders.

“The proposal vindicates the directors’ consistently held view that the Xstrata offer is low ball and grossly inadequate,” Indophil chairman Brian Phillips said in a statement.

Crosby’s merchant banking division owns interests in Japanese natural resource company IB Daiwa, California upstream oil & gas company Orchard Petroleum, Australian medical testing company Fermiscan Holdings and Australian clean coal technology company White Energy.