Fortescue appeals Atlas takeover

Australian iron ore firm Fortescue Metals has appealed to the Australian Takeovers Panel to investigate rival Hancock Prospecting's takeover of domestic mining firm Atlas Iron.

Fortescue, through its subsidiary NCZ Investments, claims that Hancock Prospecting, which owns 70pc of the 55mn t/yr Roy Hill iron ore mine, has made misleading statements and material omissions regarding its intentions for the Atlas assets and employees. Fortescue has asked the Takeovers Panel to stop Hancock from dispatching its bidders statement for Atlas and from acquiring any additional shares while it carries out an investigation into the takeover. The Takeovers Panel has not yet decided whether to proceed with an investigation.

Fortescue holds 19.9pc of Atlas and can block Hancock from moving to compulsory acquisition of all outstanding shares in the firm because Hancock would need to reach 90pc ownership for that. Fortescue has not made a takeover offer at this stage

Atlas last week withdrew its previous recommendation in favour of the takeover offer from fellow Australian mining firm Mineral Resources, which made the original bid for Atlas. It was offering an all-share transaction of one of its shares for 571 Atlas shares that valued its target at A2.8¢ (2.1¢) per Atlas share at Mineral Resources' share price of A$16.26 that it was trading at. Hancock is offering A4.2.¢ cash for each Atlas share, valuing the firm at around A$390mn.

Mineral Resources has confirmed it will not make a counter offer.

Hancock, which is controlled by Australian entrepreneur Gina Reinhart, already owns 19.96pc of Atlas.

Atlas is struggling to remain profitable because of the large discounts applied to its lower grade ore, but has attracted takeover interest because of its 15mn t/yr export allocation at Port Hedland. Atlas, Fortescue Metals and Roy Hill all export iron ore through Westerb Australia's Port Hedland. Atlas also has lithium assets, which could be of interest to all three potential bidders as they look to diversify their commodity base.