China's Minmetals Resources bowed out of the battle for copper miner Equinox Minerals, saying Barrick Gold Corp's C$7.3bn (£4.66bn) bid was too rich.
Canada's Barrick, the world's largest gold miner, announced its agreed offer for Equinox , seeking to tap surging demand for copper from China and other developing economies that has pushed prices up more than sevenfold in the past eight years.
Minmetals, a unit of China's largest metals trader, said it could not justify paying so much and would seek other opportunities.
"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, sending its shares plunging 12 per cent in Hong Kong.
Barrick's offer is at a rich valuation of more than 14 times Equinox's 2010 earnings before interest, tax, depreciation and amortisation of $523 million.
Equinox, a global miner listed in Canada and Australia, owns the Lumwana mine in Africa's rich Zambian copper belt and most of the Jabal Sayid project in Saudi Arabia.
A weaker-than-expected capital raising by Minmetals in Hong Kong last week prompted speculation it might not have the funding in place to formally launch the unsolicited C$6.3 billion offer it announced earlier this month.
Minmetals, which said it had a 4.2 per cent stake in Equinox, is majority controlled by state-owned China Minmetals Non-Ferrous Metals Co Ltd, so could potentially have tapped Beijing for funding. Traditionally, however, state-owned Chinese firms do not get drawn into bidding wars.
City A.M. Reporter