Australian mining and commodities firm Mineral Resources (MRL) has signed a binding scheme implementation deed to acquire all of the shares in Atlas Iron for a sum of A$280m ($215m).
The agreement will be carried out via a scheme of arrangement and is slated to result in the merger of the two companies.
MRL is set to offer Atlas shareholders one new share for every 571 Atlas shares currently held under the latest deal.
MRL managing director Chris Ellison said: “The acquisition of Atlas, including its portfolio of iron ore assets and its export capacity allocation at Utah Point, is on strategy for MRL.
“The amalgamation of MRL’s existing Pilbara iron ore assets with those of Atlas will enable us to exploit greater synergies and economies of scale, which will drive down costs to ensure the consolidated iron ore business is sustainable in the new environment of lower global prices for low-grade iron ore.
“The increase of our iron ore production in the region is also a key part of our strategy to ensure our 50 million tonnes per annum (Mtpa) Pilbara infrastructure initiatives are fully utilised and in turn forming a key pillar of the MRL business over the next 20 to 30 years.”
In addition, the companies have also reached an alliance agreement to explore the possibility of joint operations in the Pilbara region.
The working capital for the partnership will be provided by MRL under the arrangement.
Altas directors recommended that the company’s shareholders vote in favour of the scheme, provided there is no better proposal.
The transaction is subject to court and Atlas shareholder approval and is currently expected to be completed by August.