Weir Group Backs Down From Negotiations with Metso After $6.13B Equity Bid Rejected
Scottish mine engineering specialists Weir Group has given up on its pursuit of Finnish rival Metso after it rejected an improved offer of $6.13 billion for around 40 percent of the proposed merger.
Metso claimed that the sweetened proposal still significantly undervalued their business and even came across an “opportunistic” approach, its board reinforcing the desire to remain an independent company.
In a public statement the Scottish company said: “Weir believes it made a compelling proposal but remains financially disciplined and therefore does not intend to pursue this opportunity further at this time.”
The failed marriage of the companies, which make equipment for the energy and mining, was an attempt by the Scottish firm to boost its activities in rock-crushing, area in which Metso is a world leader.
If the merger went ahead the combined value of the new company would have been more than $15 billion according to some estimates based on current market values for the individual businesses.
In rejecting the latest proposal, Metso attempted to reassure shareholders that it would work hard to add value away from this deal.
It said in a statement: “Metso is a leading process performance provider, with strong positions in the mining, construction, and oil & gas industries. All of its core businesses have significant opportunities for growth.
“Metso has successfully completed the demerger of Valmet Corporation and the Board believes that the company and its management team have significant opportunities to deliver substantial value to shareholders in its different end markets across mining, construction and automation.”
Lynas revenue jumps 21% as rare earth prices jump
Australian miner Lynas Rare Earths posted a 20.6% rise in revenue in the March quarter as selling prices for the key metals it mines hit record highs amid strong demand, particularly for neodymium and praseodymium (NdPr).
NdPr is used in magnets for electric vehicles and windfarms, in consumer goods like smartphones, and in military equipment such as jet engines and missile guidance systems.
The company said it plans to maintain production at 75% however, as it seeks to continue to meet covid-19 safety protocols and grapples with shipping difficulties. Shares in Lynas fell 6.1% after the results.
“They have faced a few logistics issues, and it would be good to know when they are going to start lifting their utilisation rates a bit,” said portfolio manager Andy Forster of Argo Investments in Sydney.
“Pricing has been pretty strong although it may have peeled back a bit recently. I still think the medium, long-term outlook is pretty good for their suite of products.”
Lynas post ed revenue of A$110mn ($85.37mn) for the three months to the end of March, up from A$91.2mn a year earlier as prices soared.
It said its full product range garnered average selling prices of A$35.5/kg during the March quarter, up from $23.7 in the first half of the financial year. “While the persistence of the covid crisis, especially in Europe, calls for careful forecasts for our business ahead, we see the rare earth market recovering very quickly,” said Lynas, the world’s largest rare earths producer outside China.
Freight demand has spiked during the pandemic, while the blockage of the Suez Canal in March delayed a shipment to April.
Lynas’ output of 4,463 tonnes of rare earth oxide (REO) during the quarter was marginally lower than 4,465 tonnes from a year earlier.