(Reuters) - Australian mining infrastructure group Mineral Resources Ltd (MIN.AX) said on Monday it has agreed to acquire iron ore miner Atlas Iron (AGO.AX) via a scheme of arrangement, valuing Atlas at A$280.2 million ($215.2 million).
Mineral Resources said in a statement that Atlas shareholders would be offered 1 new Mineral Resources share for every 571 Atlas shares, representing a 59 percent premium to Atlas’ last close. Atlas last traded at A$0.019 on Wednesday last week, while Mineral Resources closed at A$17.24.
Atlas directors unanimously recommended that shareholders vote in favor of the scheme.
Atlas shares were worth more than A$4 in 2011, as iron ore prices surged. It was considered an emerging iron ore powerhouse, before getting hit by rapidly declining spot prices.
A debt restructure in 2016 saved Atlas from falling into administration but the company never really thrived again, leaving it little option but to accept the deal proposed by Mineral Resources.
“The scrip nature of the scheme also delivers a number of key benefits to Atlas shareholders, including; retained exposure to Atlas, the opportunity to benefit from potential synergies driven by the combination and greater diversification of revenue and commodity exposure,” Atlas Managing Director Cliff Lawrenson said in a statement.
Mineral Resources said the amalgamation of its existing Pilbara iron ore assets with those of Atlas would lead to greater synergies and economies of scale, helping to drive down costs to ensure the consolidated iron ore business is sustainable amid lower prices for low grade iron ore.
($1 = 1.3023 Australian dollars)
Reporting by Susan Mathew in Bengaluru; editing by Richard Pullin