Australia’s Takeovers Panel has given Chinese companies another sharp lesson in the ways of cross-border M&A. This time: no concert parties.
It has ruled that Shougang Concord can’t go ahead with buying a 19.7% stake in Australian iron ore company Mount Gibson because Apac Resources, in which Shougang Hong Kong holds an 18% stake, already owns 20..2%. That would take Shougang above the 19.9% stake that triggers the requirement for a full bid under Australia’s takeover rules.
Shougang Concord and Shougang Hong Kong are both subsidiaries of state-owned steelmaker Shougang Corp. Shougang Concord was proposing to buy its stake in Mount Gibson from Gazmetall, an ore producer controlled by Ukranian-born billionaire Alisher Usmanov.
Chinese steel companies have been trying to buy a number of Australian mining companies in order to secure raw materials. Sinosteel is making a hostile A$1.2 billion bid for Midwest Corp, and Baoshan Steel is involved with BHP Billiton’s attempt to buy Rio Tinto for $140 billion. The Takeovers Panel has made it clear that if the Chinese are to come, they have to come in through the front door.