Andrew Forrest’s Fortescue Metals Group has sold down its stake in takeover target Atlas Iron, but has retained an 11.4 per cent share for “strategic reasons”, which could include muddying billionaire Gina Rinehart’s attempts to acquire the junior miner.
FMG had previously held a 19.9 per cent stake in Atlas, which it purchased last month as a three-way takeover battle between it, Chris Ellison’s Mineral Resources and Gina Rinehart’s Hancock Prospecting emerged.
Hancock’s bid of 4.2 cents per Atlas share, made through its subsidiary Redstone Corporation and valuing the target at $390 million, won the backing of Atlas’ board of directors, as it was considered superior to Mineral Resources’ $280.2 million, all-scrip offer made in April.
FMG acquired its stake in Atlas as an attempt to block the growth of a joint venture between Mineral Resources and Atlas at a congested export port in the north west of Western Australia.
Its retention of a 10-plus-per cent stake in Atlas prevents Redstone from reaching a 90 per cent stake in the junior miner, the threshold where the company could move to compulsorily acquire the remaining shares it does not already own.
Redstone’s stake in Atlas was 56.07 per cent as of Friday.
“Fortescue has considered its options with regard to the 19.9 per cent shareholding in Atlas Iron and has decided to retain a substantial shareholding for strategic reasons, reflecting our confidence in the long-term fundamentals of the iron ore sector in the Pilbara,” FMG chief executive Elizabeth Gaines said in a statement to the ASX.
Redstone’s offer from Atlas was initially due to expire today, however, it extended the bid on Friday until August 17.
FMG said it would focus on its recently-announced $US1.3 billion Eliwana mine and rale project, as well as a looming decision on whether to go ahead with another new operation, the Iron Bride high-grade magnetite joint venture.
Ms Gaines said FMG would also “actively participate” in proposed industry consultation with the WA government regarding access to export berths at Port Hedland.