Offer for North Limited
Anglo American PLC
21 July 2000
Anglo American plc announces Offer for North Limited
Anglo American plc ('Anglo American') announces a recommended
takeover bid for North Limited ('North'). Mitsui & Co., Ltd.
('Mitsui'), Nippon Steel Corporation ('Nippon') and Sumitomo
Metal Industries, Ltd. ('Sumitomo'), North's joint venture
partners in Robe River Iron Ore Associates ('RRIA'), have
indicated their strong support for Anglo American's offer for
North.
The North Board has indicated it will unanimously recommend
this bid to its shareholders.
The offer price is A$4.20 per share in cash, equivalent to a
market capitalisation of A$3.1 billion (US$1.8 billion). In
addition, prior to the closing of the offer, North will
declare and pay a fully franked dividend of A$0.05 per share
to existing shareholders. For the fiscal year ended 30 June
1999 North reported attributable losses of A$26 million (US$15
million) after abnormal charges of A$141 million (US$82
million). For the nine months ended 31 March 2000, North
reported attributable profits of A$372 million (US$216
million), after abnormal profits of A$270 million (US$157
million). As at 31 December 1999, North reported net assets
of A$2.1 billion (US$1.2 billion).
The transaction represents a key strategic move for Anglo
American to enter the iron ore industry. North is a leading
expert in low-cost iron ore mining with a significant presence
in both Western Australia and Canada. Following the
acquisition of North, Anglo American will rank as the No. 4
global producer in the iron ore seaborne trade, with
opportunities to grow further through a global iron ore
alliance with Mitsui.
'The expansion of our mining and natural resources operations
and the application of our mining expertise across commodities
where we can add value is a key element of Anglo American's
growth strategy', said Tony Trahar, the CEO of Anglo American.
'We identified the global seaborne iron ore industry as a
strategic target some five years ago and this acquisition
increases our exposure to long-life, low-cost ore bodies in a
less cyclical commodity with attractive growth prospects. The
transaction is accretive to earnings from Year 1. The
increase in gearing brings us within our target gearing ratio
of 25 per cent. - 30 per cent. and meets our return on equity
hurdles on the basis of conservative commodity price, cost of
capital and real discount rate assumptions.'
The iron ore industry shares many common customers with Anglo
American's existing operations, including Mitsui, Nippon and
Sumitomo. According to James Campbell, Chairman of Anglo
American's Coal and Base Metals Divisions, 'The acquisition of
North gives us access to world class iron ore assets and
creates the opportunity to further develop our position
through the development of a global iron ore alliance.'
Anglo American, Mitsui, Nippon and Sumitomo have agreed in
principle a strategic partnership to accelerate and expand
development of RRIA's West Angelas deposit, a major new source
of high quality iron ore in the Pilbara region in Western
Australia. A binding agreement to construct a third railway
in the Pilbara already exists between North and its RRIA joint
venture partners. Anglo American will ensure that North
fulfills its obligations under this agreement.
Discussions are also underway which are expected to lead to a
restructuring of the ownership of the new railway line from
that currently agreed. In terms of these discussions, RRIA
will remain the operator of the railway, which will be funded
in part by RRIA, in which North currently holds a 53 per cent
stake, with the balance funded by the Japanese side. The
participation by the Japanese parties in the financing of the
railroad will be in addition to their existing commitments to
the railroad as joint venture partners in RRIA.
Furthermore, Anglo American will receive strong support from
Nippon and Sumitomo for additional iron ore supply contracts
from the Japanese steel industry for both the West Angelas
development and the extension of existing supply agreements
from RRIA's Pannawonica mine. The benefits of the additional
Japanese participation in the railroad and the new supply
contracts are unique to Anglo American.
Anglo American is separately negotiating additional supply
contracts with Japanese counterparties in other commodities,
thereby enhancing Anglo American's relationship with Japanese
customers across multiple business areas.
Anglo American notes that North's non-iron ore assets in
copper, uranium, zinc and forest products have a strong
overlap with existing Anglo American operations and expertise.
Anglo American's offer is subject to certain conditions,
including Anglo American acquiring more than 50 per cent. of
North shares and receiving approval from the Australian
Foreign Investment Review Board. The conditions are outlined
in the attachment to this release. Anglo American's Bidder's
Statement will be lodged as soon as possible. Anglo American
will make the offer through a wholly-owned Australian
subsidiary. The acquisition will be financed through new
borrowing facilities arranged by Anglo American.
Anglo American is being advised by Credit Suisse First Boston.
Legal advisers are Freehills.
Anglo American is a leading mining and natural resources
company with its primary listing in London and secondary
listings in Johannesburg and Switzerland. Anglo American's
mining assets include interests in AngloGold, the world's
largest gold producer, Anglo Platinum, the world's largest
primary producer of platinum, De Beers, the world's largest
producer and marketer by value of gem diamonds, Anglo Coal,
one of the world's largest private sector coal producers as
well as a substantial spread of base metal operations and
projects. Anglo American also has significant interests in
industrial minerals, ferrous metals and forest products and
packaging activities. Anglo American's activities in
Australia include coal mines being acquired from Shell,
interests in Anaconda Nickel and in manganese, and, through
AngloGold, Acacia Resources.
Ends
Inquiries to:
Anglo American plc
Tony Lea - Finance Director
+44 20 7698 8888
Edward Bickham - External Affairs
+44 20 7698 8888
James Campbell - Chairman, Coal and Base Metals Divisions
+27 11 638 3539
Anne Dunn - Investor Relations
+27 11 638 4730
Credit Suisse First Boston
Simon Prior-Palmer - London
+44 20 7888 8888
Rob Stewart - Melbourne
+61 3 9280 1666
Conditions of Anglo American plc's Takeover Bid
1. FIRB and all other necessary regulatory approvals.
2. A minimum acceptance condition of not more than 50.1 per cent.
3. That during the period from the date of this document
until close of the offer period under Anglo American's
Takeover Bid:
(a) no material adverse change occurs to, or is announced
or otherwise becomes public, in the business,
financial or trading position, assets or liabilities
or profitability of North and its subsidiaries taken
as a whole;
(b) North does not incur or commit to incur an amount of
capital expenditure in excess of A$100 million other
than:
(i) capital expenditure that has previously been
announced as intended to be incurred or
committed;
(ii) capital expenditure which relates to the West
Angelas Development or the business of Iron Ore
Company of Canada; or
(iii) capital expenditure in the day to day operating
activities of the business of North and its
subsidiaries conducted in the same manner as
before the date of this document;
(c) North does not acquire or dispose of any asset or
business, or enter into any corporate transaction,
which would involve a material change in:
- the manner in which North conducts its business;
- the asset base of North; or
- the nature or extent of the liabilities of North.
Capital expenditure which may be incurred or committed
to without breaching paragraph (b) shall be taken not
to constitute a breach of this condition;
(d) none of the events referred to in Section 652C(1) or
(2) of the Corporations Law occurs in relation to
North other than:
- the payment of a fully franked dividend of five
cents per North Share to the shareholders of North
during the offer period of Anglo American's Takeover
Bid;
- the issue of North Shares as a result of the
exercise of options to subscribe for North Shares
granted under the North Share Option Incentive Plan;
- the issue of North Shares to non-executive directors
under the North Non-Executive Directors' Share
Scheme; and
- the awarding of not more than 2,500,000 Rights
(within the meaning of the North Incentive Share
Scheme for Senior Executives ('ISSSE')) as required
by the ISSSE to a person in favour of whom a
Notional Maximum Allocation (within the meaning of
the ISSSE) was made before the date of this
document.
4. That between the date of this document and the date on
which the offer period under Anglo American's Takeover Bid
closes, the ASX (200) Index as calculated by Australian Stock
Exchange Limited does not close below 2800 for 5 or more
consecutive trading days.
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