Australian miner Sundance Resources on Monday accepted a $1.4 billion takeover offer from Hanlong Group, a fifth less than previously agreed, after the Chinese company sought a lower acquisition price following a slide in Sundance's shares and prices of iron ore.
Hanlong had launched an offer last October but was in talks to reduce the price after Chinese regulators late last month raised concerns about the cost, as Sundance's shares were down 40 percent since the bid was launched and iron ore prices were near a three-year low.
Mining deals have cooled this year as demand from China falls, prompting global miners to cut jobs and put expansion plans on hold as they focus on arresting a slide in profits.
Analysts also said Sundance had to agree on new terms for the deal or risk needing to raise significant funds to develop its mines in Africa.
Shares in Sundance, trading of which had been halted on July 31 pending the talks, rebounded as much as 14 percent Monday.
"The lower price just reflects the nature of the market. Buyers can call the terms now," said James Wilson, a senior mining analyst at RBS Morgans.
"Shareholders should be happy given the market outlook and the other alternative, which is for Sundance to raise billions to develop the mines," he said.
The revised deal was agreed at 45 cents a share, compared with 57 cents agreed in October, Sundance said in a statement.
The deal, which still needs funding support from China Development Bank and final approval from the Cameroon and Congo governments, is expected to be completed by mid-December, Sundance said.
Hanlong already owns 17 percent of Sundance and wants Sundance for its $4.7 billion Mbalam iron ore project on the border of Cameroon and Congo in western Africa. The region is seen as a major new source of iron ore that could cut China's dependence on Australia and Brazil.
Sundance shares were up 7.5 percent at 36 cents as of 0320 GMT, still well below the agreed price.
Iron ore prices have tumbled this year, hitting an almost three-year low below $100 a ton on Friday, while benchmark thermal coal prices have slumped 20 percent to around $92 a ton.
Reuters