Gina Rinehart just made a $390 million takeover bid for Atlas Iron - and the shares are soaring

Rinehart has her sights set on Atlas Iron’s iron ore assets.(Photo by Bradley Kanaris/Getty Images)
  • Redstone Corp., a subsidiary of Gina Rinehart’s Hancock Prospecting, has lobbed an all-cash offer for 100% of the shares in Atlas Iron.
  • Atlas Iron’s iron ore assets have recently become the subject of a strategic bidding war.
  • When shares in Atlas came out of a trading halt this afternoon, they rose more than 20% to 4.4 cents a share – a level slightly above the Redstone offer.

A company controlled by Gina Rinehart has made an offer to purchase 100% of Atlas Iron for $390 million.

Atlas Iron went into a trading halt this morning, pending the announcement.

The bid was made by Redstone Corporation Pty Ltd, a wholly‐owned subsidiary of Rinehart’s Hancock Prospecting.

Today’s announcement follows developments last week, where it emerged that Redstone had accumulated a 19.96% shareholding in Atlas.

The all-cash offer values Atlas at 4.2 cents per share, a 16.67% premium to its price of 3.6 cents before the halt.

Coming out of the halt, the shares jumped more than 23% to above Rineharts offer and at around 3pm sit at 4.4 cents, suggesting the market believes there will be a counter offer.

“We see long term synergies between the Atlas assets and the other iron ore interests within the Hancock  Group,” said Hancock Executive Director Tad Watroba.

“There  is  potential  to  unlock  value  through  the  future  development  of  Atlas  resources as part of our wider system of operations.”

Atlas Iron’s ore assets in the Pilbara region of WA have recently become the subject of a strategic bidding war.

Earlier this month, billionaire Andrew Forrest’s Fortescue Metals Group took a 19.9% stake in Atlas, which was enough to block a separate takeover bid by Mineral Resources.

The offer from Redstone represents a premium of around 41% from the Mineral Resources bid, which was an all-scrip bid made in April.

Atlas shares rose to around 4.5 cents per share before falling sharply last week, when the company was told that it didn’t have priority rights for shipping berths at Port Hedland.

The company became the victim of falling iron ore prices back in 2015, announcing at the time that it would be ceasing operations.

Since then prices have surged, and the Atlas assets are now the target of larger players, who can employ economies of scale to extract the iron ore at a lower cost per tonne.

“If we obtain control of Atlas, we intend to conduct a strategic review to better understand the most appropriate time and means to develop and integrate Atlas into the existing operations of the Hancock Group,” Watroba said.

He said the Atlas iron ore deposits have the potential to improve the ore quality of the predominantly 62% fines — the benchmark iron ore grade — which Hancock exports to China.

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