Updated, 8:43 a.m. |
HONG KONG — A consortium of state-owned Chinese companies led by the China Minmetals Corporation, one of the country’s biggest metals miners, announced an agreement on Monday to buy a giant copper mine in Peru from Glencore Xstrata for more than $6 billion.
In a deal that demonstrates how Chinese regulators are influencing global mergers and acquisitions far beyond China’s borders, Glencore said it would sell its Las Bambas copper mine project to the Chinese group for $5.85 billion in cash plus development costs. The sale of the mine was a condition stipulated last year by China’s Commerce Ministry before it approved the $30 billion purchase by Glencore International, a Swiss commodities trader, of the mining company Xstrata.
MMG Limited, a subsidiary of China Minmetals that is listed in Hong Kong, leads the buyers’ consortium with a 62.5 percent stake. Guoxin International Investment Corporation, a state-owned infrastructure and resources company, has a stake of 22.5 percent, while Citic Metal, the metal trading unit of the state-owned Citic Group conglomerate, owns 15 percent.
In addition to the $5.85 billion, the buyers have also agreed to cover all costs of developing the mine between the start of this year and the formal closing of the transaction, which is expected to take place by the end of September — a deadline imposed by Chinese regulators. Glencore said that so far those expenses amounted to $400 million in the first quarter.
The Commerce Ministry, which enforces China’s antimonopoly law, took more than a year before finally approving the merger of Glencore with Xstrata in April 2013. Citing antitrust concerns, the regulator ordered the divestment of the Las Bambas project, an open-pit mine in the advanced stages of construction that is expected to have initial production of two million tons of copper a year.
In addition, the Commerce Ministry required Glencore to agree to guarantee the supply of copper, zinc and lead to Chinese companies through 2020 by signing long-term supply contracts.
Ivan Glasenberg, chief executive of Glencore, said that since the Xstrata deal was completed in May, “our team has taken decisive steps to de-risk Las Bambas, which has culminated in this compelling offer from the consortium.”
“Our willingness to sell reflects the level of the offer and our conviction that we can utilize the sale proceeds to create additional shareholder value,” Mr. Glasenberg said.
MMG Limited is being advised by Bank of America’s Merrill Lynch unit and Citigroup, and it will receive debt financing from the China Development Bank, the Industrial and Commercial Bank of China and the Bank of China. China Minmetals was advised by Deutsche Bank. Glencore was advised by BMO Capital Markets and Credit Suisse.
Glencore said the sale of the mine to the consortium was subject to shareholder and regulatory approvals, including approval by China’s Commerce Ministry.
Separately, a subsidiary of Glencore agreed on Monday to acquire Caracal Energy for 5.50 pounds a share, or about $9.20, in cash, in a deal valued at about £806 million. The price represents a 61 percent premium over Caracal’s closing price on Friday.
After receiving an unsolicited offer from Glencore, Caracal canceled an agreement to merge with TransGlobe Energy and paid a $9.25 million termination fee. Caracal is a Canadian international oil exploration and development company active in the Republic of Chad.
The Glencore deal, which is expected to close in the second quarter, is subject to approval by Caracal’s shareholders. There is a $15 million termination fee.
“This transaction and the significant premium it places on our shares is an excellent outcome for our shareholders,” Gary S. Guidry, Caracal’s president and chief executive, said in a statement. “Glencore has been an important supporter and partner of Caracal in Chad, and this is a natural progression in the development of this portfolio.”
Chad Bray contributed reporting from London.