John Emanoilidis comments on hostile bids, to Bloomberg

First Quantum Hostile Inmet Bid Has Low Odds

January 10, 2013

First Quantum Minerals Ltd.’s C$5.1 billion ($5.2 billion) hostile bid for Inmet Mining Corp. will probably fail, based on the track record of Canadian deals over the past 12 years.

Canadian companies have been targeted in 48 hostile deals valued at at least $100 million since 2000, according to data compiled by Bloomberg. Twenty-nine, or 60 percent, failed, including BHP Billiton Ltd.’s $40 billion bid for Potash Corp. of Saskatchewan Inc. in 2010 and Equinox Minerals Ltd.’s $4.8 billion pursuit of Lundin Mining Corp. in 2011.

Inmet, developing the Cobre Panama project, was unchanged at C$72.25 yesterday and has risen about 37 percent since the Toronto-based company announced First Quantum’s approaches. Unsolicited deals have been unsuccessful due to political influence, such as Saskatchewan’s opposition to BHP’s bid for Potash Corp., and resistance from boards that argue their firm is worth more. Often “white knights” emerge with higher offers, such as Rio Tinto Plc’s $38.1 billion friendly deal for Alcan Inc., which trumped Alcoa Inc.’s hostile bid in 2007.

“It’s more likely than not when a hostile bidder launches a bid that it’s not going to be the successful party,” John Emanoilidis, a partner at Torys LLP and co-head of the Toronto- based law firm’s M&A practice, said in a phone interview. Torys represents Inmet. “The odds would be against a hostile bidder.”

When a hostile bid is announced, the typical outcome is that a change of ownership occurs though not necessarily with the hostile bidder that initiated the process, he said. “If we were going to apply the statistics to future hostile takeovers, the hostile bidder may be disappointed.” Emanoilidis said.

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