Bloomberg News

Noble Group Offer for Territory Resources Betters Exxaro Bid

June 09, 2011

(Updates with Exxaro comment in fifth paragraph.)

June 9 (Bloomberg) -- Noble Group Ltd., the Hong Kong-based commodity trader, offered A$90 million ($95 million) for the shares in Territory Resources Ltd. it doesn’t own, outbidding a deal agreed to with Exxaro Resources Ltd.

Noble, Territory’s largest investor with a 32 percent stake, offered 50 cents for each share, Perth-based Territory said in a filing. That’s 8.7 percent more than Exxaro’s offer and a 6.4 percent premium over yesterday’s close.

Buying Territory would give Noble an iron ore operation in Australia’s Northern Territory with production capacity of 2 million metric tons. Companies are adding steel raw material assets as demand in China and India grows.

Territory surged 11 percent to 52 Australian cents by the 4:10 p.m. close of Sydney trading, taking its gain this year to 53 percent.

Exxaro is “looking at all options” after Noble’s bid, Pretoria-based spokesman Hilton Atkinson said by phone today. In an earlier statement, Exxaro urged Territory shareholders not to take any action until it reviews its position. Exxaro said the Noble bid will remain open until July 21, unless extended.

Exxaro, which has a stake in Kumba Iron Ore Ltd.’s Sishen mine in South Africa, has been looking since at least last year for iron ore opportunities, betting demand for the material will increase. Bank of America Merrill Lynch said June 7 market supply of the material will “disappoint” expectations in the near and mid-term, pushing up prices.

“Maybe they should just let it go,” Sasha Naryshkine, a fund manager at Johannesburg-based Vestact Ltd., said by phone from the city today of Exxaro. Territory’s operations have higher production costs than Kumba’s Sishen mine and its assets are “relatively small,” Naryshkine said.

Exxaro was 0.3 percent higher at 159.47 rand as of 11:39 a.m. in Johannesburg, giving the company a market value of 57 billion rand.

--Editors: John Viljoen, Tony Barrett

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net Carli Lourens in Johannesburg at clourens@bloomberg.net;

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net Amanda Jordan at ajordan11@bloomberg.net.


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