HudBay Closer to Completing Lundin Acquisition

Now that HudBay Minerals Inc. (HBMFF.PK) has acquired 97 million shares of Lundin Mining Corp. (LMC) through a private placement, it has a roughly 19.9% stake in the rival miner. At C$1.40 per share, Lundin will get roughly C$135.8-million from the deal, which it intends to use for “general corporate purposes.”

But it is much clearer what HudBay’s plans are since the two companies announced a friendly merger a few weeks ago that would see each Lundin common share exchanged for 0.3919 HudBay shares. However, it quickly met with opposition from analysts and merchant bank Jaguar Financial Corp. (JGFCF.PK), which wants to take over HudBay, sell off the pieces and return the proceeds to shareholders.

Nonetheless, the private placement is an important step in completing the Lundin acquisition, according to RBC Capital Markets analyst Adam Schatzker. He believes the C$135.8-million was not intended to reflect any amounts required to keep Lundin solvent.

HudBay management expects that it will be able to vote the 19.9% in favour of the merger together with previously locked-in shares, Mr. Schatzker said in a research note. HudBay estimates it has nearly 40% of the 66.7% needed to complete the deal.

Comments

[sliman:]

Hudbay is wasting its money. I bought it at $5 sold at $18. There are better plays out there now. BHP is a better bet.

2008 Dec 14 12:19 PM