Lundin Mining Corp. is retreating from plans to sell the company and its stake in a massive copper mine in Africa after failing to attract a rich enough offer.
Vancouver-based Lundin says it received proposals from several suitors interested in acquiring the entire company as well as other offers for individual assets. However, Lundin, whose stock market value is more than $4.9-billion, says it has decided that all of the proposals were too low.
"I am super comfortable with my assets and think they have a lot of growth potential," Lundin chairman Lukas Lundin said in an interview.
He wouldn't comment on what price Lundin was seeking for its assets, including all or parts of the company.
In a related move, Lundin's chief executive officer Phil Wright is stepping down following the conclusion of the attempted sale process.
The company said in a statement that "after careful consideration and following the receipt of advice from its financial advisers, [Lundin]has determined that these proposals did not adequately value the company or its assets and that the best way to create shareholder value is to continue to manage and develop the company's quality asset and to actively seek growth opportunities."
Sources say some of the world's largest mining companies had a look at Lundin and its properties. Chinese mining firm Jinchuan Group Ltd. as well as sovereign wealth fund China Investment Corp. (CIC) were among the suitors eyeing a possible acquisition of the Canadian miner.
The rebuff of Jinchuan and CIC marks the second time in recent weeks that a Chinese mining company has failed in an attempt to acquire a Canadian resource firm. Last month, a $6.3-billion hostile takeover bid for copper producer Equinox Minerals Ltd. by China's Minmetals Resources Ltd. was bested by a friendly offer from Toronto's Barrick Gold Corp.
Barrick's offer for Toronto-based Equinox topped the Chinese bid by $1-billion and within hours Minmetals had retreated from the battle, saying the stakes were too rich.
Equinox was put in play after it attempted to acquire Lundin with a $4.8-billion hostile bid of its own in February. That move was prompted by Lundin's attempt to merge with another Canadian mining company, Inmet Mining Corp., in January.
The frenzy of attempted takeovers occurred as the price of copper surged to record highs. However, the price of the metal, which is used in everything from housing to electronics, has recently declined on concerns over weakening demand from a slowing Chinese economy.
Asked if he was disappointed not to find a buyer, Mr. Lundin said no. "I just entered the process because I was forced into it," he said, referring to the hostile takeover bid from Equinox.
Still, Lundin's announcement may not put an end to a potential sale. The move could be a tactic to try to encourage potential bidders to increase their offers for the company.
While the price of copper has been falling in recent weeks, copper companies believe their assets are worth more, particularly after Barrick Gold agreed to pay a rich premium for pure copper producer Equinox.
Phil Wright, Lundin's CEO, will step down effective June 30. Lundin's head of corporate development Paul Conibear, who has spearheaded the development of the company's 24-per-cent interest in the Tenke Fungurume copper mine in the Democratic Republic of Congo, will take over as interim CEO until a permanent replacement is recruited.
Tenke is considered one of the world's top copper development projects and is expected to produce 130,000 tonnes of copper this year. The mine is majority-controlled by U.S.-based Freeport-McMoRan Copper & Gold Inc. and has faced a series of political challenges in the DRC.
Lundin's board has created a search committee and retained an executive recruiting firm to identify potential CEO candidates.
Mr. Wright's retirement and the end of the sale discussions marks the close of yet another tumultuous chapter for the Canadian mining company best known for its willingness to develop assets in politically risky countries.
It was founded by the late Adolf Lundin, a Swedish entrepreneur whose "no guts, no glory" attitude has served as mantra for the risk-taking company. His son Lukas Lundin remains the firm's chairman.
In addition to its stake in Tenke Fungurume, Lundin operates mines in Portugal, Sweden, Spain and Ireland that produce copper, zinc, lead and nickel.
Lundin is holding a conference call on Thursday morning at 9 a.m. ET to discuss the situation.
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