Is Equinox CEO Getting a Taste of His Own Medicine?

Apr. 4.11 | About: Equinox Minerals (EQXMF)

Equinox Minerals (OTC:EQXMF) chief executive officer Craig Williams is getting a taste of his own medicine after Chinese-owned Minmetals Resources Ltd. launched a $6.3-billion hostile bid for his company.

Back in February Equinox made its own hostile bid for Lundin Mining (LMC). Shortly after the announcement Mr. Williams strolled into Bank of Montreal’s (NYSE:BMO) venerable global mining conference and confidently joked that he had "spiced up" the agenda. Now he’s finding out what it feels like to be on the other end of a bid.

Both offers have stirred up some controversy. When Equinox first announced its play for Lundin, some mining executives derided the company for tacking on $3.2-billion in debt to pay for the takeover. In (Chinese miner) Minmetals’ case, some analysts have taken one look at the offer and already chided it for being too low.

UBS analyst Onno Rutten believes a fair takeover range is somewhere around $8.30 per share, much higher than the $7 per share on the table. At the moment he is putting his money on shareholders rejecting this bid.

“Although we see a low probability of other bids for [Equinox] emerging, we believe that shareholders could hold out for a bump by highly motivated Minmetals,” he wrote in a note to clients.

The low price has some people wondering whether or not China, which controls Minmetals, is playing games to delay the April 11 shareholder vote on Equinox’s bid for Lundin. But no one quite knows what to expect because this is China’s first-ever hostile bid for a major Canadian mining company, signaling a bold shift in strategy as it seeks to sate its appetite for resources to fuel its rapidly growing economy.