Vale S.A. (VALE) has announced that it will acquire South African copper and cobalt miner Metorex Limited (Metorex), for US$ 1,125 million.
Rio de Janeiro, Brazil-based Vale is one of the world’s largest producers and exporters of iron ore and pellets. It is the largest diversified mining company in the Americas and one of the largest companies in Latin America, in terms of market capitalization.
Management stated that Metorex’s board of directors had agreed to the terms of the offer of South African rands (ZAR) 7.35 per share, totaling ZAR 7,524 million. This is a conditional offer, which requires approval from Metorex's shareholders owning 75% stake. Vale has obtained the assent of Metorex shareholders representing about 25.4%.
During 2010, Metorex generated total revenues of $ 432 million and produced 51,569 metric tons of copper and 3,622 metric tons of cobalt.
Post acquisition the company will obtain controlling stakes in two operating mines of Metorex. Of these two, one is Chibuluma, in which Metorex has about 85% stake, and the other is Ruashi mine, where Metorex has a 75% stake.
Further, the company expects synergies from this merger, as Metorex’s assets are located near two of Vale’s Central African copper projects. This acquisition will support Vale’s goal of becoming one of the largest copper producers in the world.
In 2010, Vale acquired Corumbá iron ore mining operations from Rio Tinto for $ 750 million, and mines at Simandou, the site of a large underdeveloped high quality iron ore deposit at a low cost. It also purchased potash projects in Argentina and Canada, and the Bunge phosphates operations for $ 1.7 billion.
In February 2011, the company posted net earnings of $ 1.12 per ADR for the fourth quarter of fiscal 2010, compared with 28 cents per ADR in the year-ago quarter and beating the Zacks Consensus Estimate of $ 1.00 per ADR.
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