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Oxiana and Zinifex to merge to create a major diversified mining
company
3 March 2008
Oxiana Limited ("Oxiana") and Zinifex Limited
("Zinifex") today announce that they have entered into a
definitive agreement to merge their businesses, creating a new major
diversified base and precious metals mining company with global capability.
The merged company will be re-named and will remain headquartered in
Melbourne, Australia.
Transaction Highlights
Zinifex shareholders will receive 3.1931 Oxiana shares for each Zinifex
share they own. The terms reflect a merger of equals with the merged entity
to be owned 50% by Oxiana and Zinifex shareholders, respectively.
- The Board of
Oxiana and the Board of Zinifex each believe that the new entity will
be better positioned for growth than either company on a standalone
basis.
- The merger will
combine two companies with highly complementary operational,
development and exploration profiles and create a group with:
- A market
capitalisation of approximately A$12 billion, making it the 3rd
largest diversified mining company listed on ASX.
- The world's
second largest producer of zinc and a substantial producer of copper,
lead, gold and silver.
- Five competitive
mining operations in Australia and Asia and three new mining projects
in development.
- A large portfolio
of diversified development and exploration activities throughout
Australia, Asia and North America.
- A net cash
balance of approximately A$1.9 billion (as at 31 December 2007) and
combined EBITDA (in calendar year 2007) of approximately A$1.7 billion.
- A strong platform
to grow both organically and through acquisitions.
- Upon completion of
the merger, Mr. Barry Cusack, Chairman of Oxiana, will remain Chairman
and Mr. Andrew Michelmore, current Chief Executive Officer and
Managing Director of Zinifex, will be CEO of the merged entity. All
the current directors of both companies will form the Board of the
merged entity. Mr. Owen Hegarty, current Managing Director and CEO of
Oxiana, will become a Director of the merged entity and Chairman of
the Integration Committee of the Board. Importantly, Mr. Hegarty's
skills, experience and drive will continue to be available to the
merged company. Mr. Peter Mansell, Chairman of Zinifex, will chair the
Remuneration and Nomination Committee.
- The senior
management team will be drawn from the two companies' existing
management teams and, given the scale of the combined group and its
development pipeline, overlap of roles is expected to be minimal.
- Upon completion,
the combined entity will be re-named, reflecting the new and expanded
business that will be created through the merger.
- The entitlements
of shareholders of both Oxiana and Zinifex to receive the dividends
declared by both companies in February 2008 will not be affected by
the proposed merger.
- The merger will be
implemented by way of a Scheme of Arrangement ("Scheme")
between Zinifex and its shareholders.
- Zinifex will seek
a Court order to convene a Zinifex shareholders' meeting in May / June
2008, to approve the Scheme. Subject to receiving other necessary
Court and other approvals, the merger is expected to be implemented in
June / July 2008.
- Zinifex's
recommended takeover offer for Allegiance Mining NL will not be
affected by the proposed merger.
- Directors of both
companies are strongly supportive of the proposed merger and Zinifex's
Directors unanimously recommend that shareholders vote in favour of
the proposed merger, in the absence of a superior offer. Each Director
of Zinifex intends to vote all of the Zinifex shares they own in
favour of the Scheme.
"We are proposing a true merger of equals and the ratio of 3.1931
Oxiana shares for each Zinifex share reflects this," said Mr. Cusack
and Mr. Mansell, in a joint statement.
"The merger terms reflect our Boards' mutual judgment that relative
market valuations are the appropriate basis to ensure both groups of
shareholders receive equivalent value in the proposed merger. We took into
account the volume-weighted average prices of both companies over the
period during which the Boards of Oxiana and Zinifex have been actively
considering the proposed merger, due diligence and the prospects of each
company," the Chairmen said.
The Chairmen continued, "We believe the proposed merger will create
value for both Oxiana and Zinifex shareholders. The combined company will
have a major presence in both the zinc and copper markets, both of which
are strongly leveraged into the rapidly expanding economies of Asia and
elsewhere in the developing world. In addition, the combined group will
have a very strong balance sheet and will be wellequipped to succeed in any
market environment."
Mr. Hegarty, who has led Oxiana since 1996, said, "Oxiana and its
people have been single-minded in their commitment to building a major
mining house and the proposed merger with Zinifex is a huge step towards
the achievement of that objective."
Mr. Michelmore said, "Similarly, since it listed in 2004, Zinifex
has been a great success story, generating exceptional shareholder value
through the contribution of a team of dedicated people. The opportunity to
combine two of Australia's best-performing mining companies is very
exciting."
"The combination makes strong strategic sense," he continued,
"The two companies have largely complementary asset portfolios and
development pipelines and the merged entity will be very well positioned to
benefit from the strength of demand for commodities we see stretching out
for many years."
Andrew Michelmore added, "In addition to the physical assets, both
companies have highly-skilled workforces and management teams, which in
combination will make the merged entity a resources powerhouse."
"Andrew, who will
become the CEO of the merged entity, is the right person to take the
combined company forward," noted Owen Hegarty. "Andrew has
extensive experience in the mining industry, both in Australia and
internationally and I am personally delighted that he has enthusiastically
accepted the challenge of leading the merged entity through the next stages
of its growth."
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