Minmetals out of Equinox race

City A.M. Reporter
CHINA’S Minmetals Resources bowed out of the battle for copper miner Equinox Minerals yesterday, saying Barrick Gold’s C$7.3bn (£4.65bn) bid was too rich to justify a counter-offer.

Canada’s Barrick, the world’s largest gold miner, announced its agreed deal for Equinox on Monday, seeking to tap surging demand from China and other developing economies that has pushed copper prices up more than sevenfold in the past eight years.

Minmetals, a government-backed unit of China’s largest metals trader, said in a statement it would not top Barrick’s offer and would seek other opportunities.

While China’s outbound acquisition machine has gained in strength, Beijing follows a strict and price sensitive policy when it comes to doing deals.

“Competing with Barrick at these prices would, in our view, be value destructive for (our) shareholders,” Andrew Michelmore, Minmetals’ chief executive, said in a statement.

Investors punished Minmetals’ cautious approach. It shares plunged as much as 13 per cent in Hong Kong on concerns it had missed out on a rare, sizeable copper deal.

Barrick’s offer values Equinox at a hefty 14 times its 2010 earnings before tax.