Financial Times: MPs attack Xstrata's WMC bid: “Although the board has rarely opposed foreign takeovers in recent times, the federal government intervened in 2002 and ruled that a full takeover bid from Royal Dutch Shell for Australia's largest oil and gas producer, Woodside, was against the national interest.” (ShellNews.net) 24 Dec 04
By Lachlan Colquhoun in Sydney
Published: December 24 2004
Xstrata, the Swiss-based miner, is facing growing political opposition to its $7.4bn takeover offer for Australia's WMC Resources ahead of a formal approach to shareholders expected next week.
Geoff Gallop, Western Australia's state premier, has called on the federal government to block Xstrata's bid for WMC, citing the bidding company's recent decision to close its Windimurra vanadium mine in the state.
The decision, which the WA government says has left A$30m (US$23m) in infrastructure development sitting idle, has prompted letters from the state government to Peter Costello, federal treasurer, asking him to intervene in the WMC takeover.
Xstrata's closure of the Windimurra facility has also been raised in federal parliament, with conservative Liberal and Labor MPs from WA opposing the move.
A WA parliamentary inquiry has criticised Xstrata for dismantling the vanadium plant, while keeping open its vanadium mines in South Africa.
If Xstrata's bid for WMC is successful, the deal must be ratified by Australia's Foreign Investment Review Board. Although the board has rarely opposed foreign takeovers in recent times, the federal government intervened in 2002 and ruled that a full takeover bid from Royal Dutch Shell for Australia's largest oil and gas producer, Woodside, was against the national interest.
Other politicians have claimed that WMC's Olympic Dam mine, the world's largest uranium deposit, is too important strategically to fall into the hands of offshore investors.
Meanwhile, WMC's board has told its shareholders and the Australian Stock Exchange the Xstrata offer was "not good enough".
Xstrata's A$6.35 a share offer has formally been mailed to WMC shareholders, but WMC's board continues to point to the company's share price, which has travelled above A$7 for the past month. The shares closed at A$7.12 yesterday.
WMC's board has sweetened its pitch to shareholders in the past month, promising another 50 Australian cents a share in the next six months and announcing a A$250m share buy-back.
The letter urges shareholders to "hang on" to their WMC shares, emphasising the company's "world class assets" and growth potential.
Although Xstrata's offer remains below WMC's market price, market speculation of a counter-bid from a host of reported suitors from BHP Billiton to Rio Tinto has so far come to nothing.