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MELBOURNE (Reuters) – Minmetals Resources (1208.HK), China's large metals trading firm, on weekday offered $6.5 1000000000 to acquire Equinox Minerals (EQN.AX)(EQN.TO), chasing the direct company's conductor assets in Zambia and Arabian Arabia.

China, which accounts for 40 proportionality of the world's obligation for copper, is on a defence acquisition spree as prices for the flushed metal waver nearby achievement highs.

Minmetals, which owns defence dealings in state and Asia, said it would substance C$7 per deal for Equinox, a 23 proportionality payment to Equinox's close in Toronto terminal weekday of C$5.71. It would be China's fourth-biggest outbound M&A deal, according to composer Reuters data.

Equinox's inhabitant shares surged 29 proportionality to a achievement A$7.35, superior the continuance of the Minmetals' substance on expectations a competition effort haw emerge.

"It's game on now," said Ausbil Dexia Chief Executive Apostle Xiradis, a investor in Equinox. "They'll be hunting to defend their greensward and it haw stimulate additional party to become in as well, hunting for calibre assets such as those held by Equinox."

Minmetals' shares chromatic 2.4 proportionality to HK$6.72.

Chief Executive saint Michelmore told Reuters the Equinox substance was Minmetals' best price, adding he was not considering increasing it.

"It fits into a strategy of building a leading planetary diversified humble metals upstream business," he after told a media word in Hong Kong.

"It certainly fits in with the strategy in cost of growing the humble metal size, specially in cost of copper," said Michelmore, adding Minmetals would be the world's 14th maximal conductor shaper after the deal, from its current rank of 30th.

The substance is contingent on Equinox descending its C$4.7 1000000000 effort for Canada's Lundin Mining (LUN.TO), which has been the person of a removed takeover tussle between Equinox and Inmet Mining (IMN.TO).

NOT A KNOCKOUT

Investors said it was doable competition bidders could rise for Sydney- and Toronto-listed Equinox, but said they haw be deterred by Minmetals' finance power.

While Minmetals has a mart continuance of meet $2.5 billion, the metals trading firm said its effort was being funded with credit from Asiatic banks and justness investments by Asiatic institutions.

"Ultimately no digit wants to intend into a bidding struggle with Chinese-related parties, presented that Asiatic companies are detected to hit a modify cost of capital qualifying to western companies," said Tim Schroeders, a portfolio trainer at Pengana Capital.

Minmetals was finalizing a loan of around $5 1000000000 to back its bid, composer Reuters business Basis Point reportable on Monday. Banks approached allow Bank of China (3988.HK) and China Development Bank (CHDB.UL), sources with knowledge of the concern said. European and Asian banks hit also been in talks with the borrower, they added.

China, and to a lesser degree India, hit been scouring the globe to bonded resources to fuel their fast-growing economies. Asiatic banks hit loaned individual nations billions of dollars and sworn to money field infrastructure projects as part of a drive to bonded access to everything from conductor to shackle ore and food.

Surging orbicular obligation for conductor nonnegative the broad cost and long advance instance to bring newborn resources to creation has oxyacetylene expectations of more takeover state and a prolonged Samson run in the metal.

London Metal Exchange conductor grazed a achievement broad of $10,190 a metric ton in February, and on weekday stood at $9,350. It has risen some 120 proportionality in the instance digit years.

Investors said Minmetal's substance payment was reasonable but not necessarily broad enough, as Equinox's shares had declined in recent weeks on concerns most the Lundin deal.

"I would exposit it as a realistic substance but not a knock-out bid," said James Bruce, portfolio trainer at Perpetual, which recently oversubscribed its Equinox shares.

"It's a cleverly timed effort by Minmetals. We thought Equinox were stipendiary likewise such for Lundin and were attractive on likewise such debt in that deal."

This will be Minmetals' ordinal field acquisition after it bought Minerals and Metals Group (MMG) for $1.85 1000000000 from state-owned parent, China Minmetals Non-Ferrous Metals Group, New terminal year. It is already thinking a newborn deal issue of $1 1000000000 to part-fund the MMG deal.

SURPRISE BID

Equinox said in a evidence its commission planned to meet to study the Minmetals bid. It has not still prefabricated a congratulations to shareholders to accept or react the bid.

A maker old with Equinox said the Minmetals approach caught the consort by surprise. Equinox executives are currently in Canada marketing the Lundin offer, which Lundin's commission has urged shareholders to reject.

The care marks the latest in a string of inhabitant defence takeovers involving Michelmore, who has been criticized by some discontent investors for his road achievement on mergers and acquisitions.

He was at the helm of WMC Ltd in 2005 when it was oversubscribed to BHP Billiton (BHP.AX)(BLT.L) for $6 billion, a understanding seen as likewise affordable after fiver prices rocketed presently after the care was completed.

He went to impact for Slavonic oligarch Oleg Deripaska for digit eld after that before returning to state to nous metal jack Zinifex, which merged with Oxiana to form OZ Minerals (OZL.AX).

A assemblage later, the orbicular business crisis sank OZ low a debt pile, clearing the artefact for Minmetals to acquire most of its assets for $1.4 billion.

ZAMBIA, SAUDI PROJECTS

The important attractions at Equinox are its Lumwana conductor and uranium mine in Zambia, Africa's third-largest conductor mine by production, and the Jabal Sayid conductor utilization in Arabian Arabia, cod to start creation incoming year.

Those mines could draw Xstrata (XTA.L), metropolis (ANTO.L), Hindooism Resources (VED.L) and possibly Norilsk Nickel (GMKN.MM), analysts said.

BHP Billiton and metropolis Tinto (RIO.AX)(RIO.L) are seen as implausible to start the bust for Equinox, as Lumwana's creation costs do not meet their acquisition criteria.

Brazil's Vale (VALE5.SA) is also implausible to pounce, as it is most to intend a newborn boss and is low pressure to invest at home.

The effort comes a hebdomad aweigh of the expiry of Equinox's substance for Lundin, which itself titled off a integration with river peer Inmet terminal hebdomad that was to create a C$9 1000000000 river conductor producer.

Lundin was not directly acquirable for interpret on Monday.

"This effort might be condemned as a bit of a sigh of comfort by Equinox investors and it is not a intense toll to be offered, but that depends on your analyse of conductor prices," said Peter Chilton, portfolio trainer at Constellation Capital Management.

Minmetals said it submitted an application to Australia's Foreign Investment Review Board (FIRB) on March 11, and said it due to get support in instance to go aweigh with the care by mid-2011.

The consort also did not wait opposition from Canada's foreign assets polity as Equinox's key dealings are right Canada.

That is in stark contrast to Minmetals' effort for river fiver jack Noranda in 2005, which unsuccessful in the grappling of a labor shout over manlike rights in China.

Deutsche Bank and Macquarie are advising Minmetals on the offer.

($1 = 0.970 river Dollars)

(Additional news by Miranda physicist in town and Euan Rocha in Toronto, Alison Leung and Farah Master in Hong Kong; Editing by Balazs Koranyi, Lincoln Feast and histrion Yates)

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