Northern Peru Copper Corp.: Who Will be the Highest Bidder?

by: FP Trading Desk

It is possible that Northern Peru Copper Corp. (OTC:NPUCF) will see a higher competing bid, despite agreeing to a C$13.75 per share cash offer from state-owned China Minmetals Nonferrous Metals Co., and Jiangxi Copper Co. (OTCPK:JIAXF), analysts said. The deal, announced on Thursday, values Northern Peru at roughly C$455-million.

Tom Meyer at Raymond James is telling shareholders of the Canadian miner to hold on, saying there is a “small, but reasonable chance for a higher offer.”

Canaccord Adams analyst Wendell Zerb meanwhile, said the offer price equates to 3.5 cents per pound of copper equivalent, which is in the range of recent takeover offers in the sector. He also noted that all officers, directors and some major shareholders of Northern Peru, representing 42% of its outstanding shares, have entered into lock-up agreements. However, this is conditional on no higher competing bids emerging.

Mr. Zerb points to Anglo American Plc (AAUK), which has an option on the Michiquillay copper project nearby, as a potential competing bidder. He pegs the chances of a rival offer at 20% to 25%, given that several other companies reviewed the asset.