China-focused iron ore miner Fortescue Metals Group has acquired 19.9 per cent of Atlas Iron, casting doubt on whether a $280 million takeover bid for Atlas by Mineral Resources will go ahead.
In announcing the $55.7 million acquisition of a 15 per cent stake in Atlas, alongside a cash-settled swap equivalent to 4.9 per cent of the target, FMG said it did not intend to support Mineral Resources’ bid for Atlas under its current terms.
However, FMG said it reserved the right to do so if it chose to.
Atlas Iron’s directors unanimously supported Mineral Resources’ bid when it was announced in early April, with the deal expected to provide significant cost synergies via the amalgamation of iron ore mining assets in Western Australia’s Pilbara.
Last month, Atlas revised its guidance for the 2018 financial year, saying it expected to record a non-cash impairment of between $75 million and $100 million due to ongoing discounts being applied to its lower grade ore.
At 1:18PM WST, Atlas shares had fallen 6.25 per cent to trade at 3 cents, FMG’s stock dipped 1.25 per cent at $4.74 and Mineral Resources’ shares were steady at $18.76.