From: Reuters
Published February 8, 2008 06:58 AM

Xstrata ups bid for Resource Pacific to $964 million

SYDNEY (Reuters) - Swiss-based Xstrata <XTA.L> on Friday raised its cash offer for Australian coal miner Resource Pacific Ltd <RSP.AX> by 12 percent to A$1.08 billion ($964 million) and declared it final.

The offer, increased by A$0.35 to A$3.20 a share, was extended until February 22.

Resource Pacific Managing Director Paul Jury told Reuters the new offer was "unimpressive" and his board was advising its shareholders against taking any immediate action while it prepared a formal response to the sweetened offer.

"I see Xstrata's offer as a sign of desperation," Jury said.


Xstrata in December launched its first offer for Resource Pacific at A$2.85 a share, trumping an all-share offer from another Australian coal miner, New Hope Corp <NHC.AX>. Resource Pacific earlier on Friday formally rejected that offer. A company spokeswoman said a response to the latest offer was under discussion by the company.

Resource Pacific has said that an independent assessment had valued the firm's shares at between A$3.56-A$4.09 a piece, with a preferred value of A$3.82 a share.

Shares in Resource Pacific, which has a market value of about A$1 billion, ended 0.7 percent higher at A$2.98, with the increased offer coming after the close of trade on Friday.

Xstrata <XTA.L> has been one of the most acquisitive-minded foreign companies in the Australian resources industry since buying MIM Holdings' zinc and copper mines in 2003, and its move on Resource Pacific Holdings <RSP.AX> comes as coal prices rocket amid a supply shortage.

Resource Pacific operates the Newpac coking and thermal coal mine, which neighbors Xstrata mines in the Hunter Valley region of New South Wales state.

Rising coal prices have triggered a stampede among producers to gain berths at Australia's over-taxed export terminals. Resource Pacific holds a coveted 4 million tonnes annual shipping quota allocation.

"Given the (Xstrata) offer is now final, it allows us to go out and actively explore all of the options available to us," Jury said.

Analysts have mentioned collieries including Felix Resources <FLX.AX>, Centennial Coal <CEY.AX>, Whitehaven Coal <WHC.AX> and Peabody <BTU.N> as other potential bidders for coal resources. ($1=A$1.12)

(Reporting by James Regan; Editing by James Thornhill)

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