Mystery bidder could beat upped Xstrata bid

WHILE Xstrata Coal increased its bid for Resource Pacific by 12% to $A3.20 per share late Friday afternoon, Resource Pacific told shareholders this morning to hold tight as it begins discussions with a third party for a
Mystery bidder could beat upped Xstrata bid Mystery bidder could beat upped Xstrata bid Mystery bidder could beat upped Xstrata bid Mystery bidder could beat upped Xstrata bid Mystery bidder could beat upped Xstrata bid

Resource Pacific's Newpac mine.

Angie Tomlinson

Resource Pacific said discussions were at an early stage, but reiterated to take no action on Xstrata's bid.

Two hours before deadline on Friday afternoon Xstrata increased its bid from $2.85 per share to $3.20, valuing Resource Pacific at $1.077 billion.

Xstrata said the price was final and would not be increased.

Resource Pacific quickly hit back at the new bid, saying it was "unimpressed".

In a letter to Resource Pacific shareholders, Xstrata said the price was a 108% premium to Resource Pacific's average share price before it became the target of takeover activity, firstly by New Hope and then Xstrata.

Xstrata also pointed out the offer was above the company's highest-ever share price.

"We believe that since September 2007, Resource Pacific's share price has been artificially supported by our initial offer and that of the previous New Hope bid, which has insulated shareholders from production issues and market volatility," Xstrata Coal chief executive Peter Freyberg said.

"Resource Pacific's share price has not moved significantly since the release of the target's statement. Xstrata believes this clearly shows that the market does not take seriously the plans of the Resource Pacific management team or the independent expert's valuation."

Xstrata has previously attacked Resource Pacific's claims, stating the company had "repeatedly failed" to meet its own forecasts, that its production forecasts (8 million tonnes per annum) for Newpac in New South Wales were not achievable, and that Resource Pacific's claims over Xstrata's existing mines' synergies with Newpac were "exaggerated".

Resource Pacific rejected Xstrata's claims about Newpac's output future and the synergies the mine offers the mining giant.

Xstrata's $3.20 offer is valid until February 22 unless further extended.

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