A unit of Chinese iron and steel giant Baosteel, Baosteel Resources Australia (BSRA) and Australia’s Aurizon have made a joint takeover offer to buy iron ore developer Aquila Resources in a A$1.4bn ($1.3bn) deal.

If the deal is successful it would be China’s biggest takeover of an Australian mining firm in the past two years and pave the way for a new iron ore export region to supply Asian steelmakers.

The companies are offering a 38.8% premium on the closing share price of A$2.45 of Aquila on 2 May.

"We believe this is a compelling offer for Aquila shareholders, providing an attractive premium to the current market value of their shares."

Following the proposed deal, Baosteel Resources International will hold around 85% of Aquila, while Aurizon will own the remaining shares. The parties plan to finance the transaction through respective cash reserves and undrawn and available debt facilities.

The acquisition is a part of Baosteel Resources’ strategy for building a global resource business through the development of the West Pilbara Iron Ore project and the Queensland Eagle Downs Hard Coking Coal project.

The Chinese firm had acquired a 15% stake in Aquila in 2009 however, it later increased its holding in the Australian firm to about 20%.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Baosteel said in a statement: "We believe this is a compelling offer for Aquila shareholders, providing an attractive premium to the current market value of their shares and certainty of value through an all-cash offer."

Aquila said: "Aquila will form an independent board sub-committee to consider and evaluate the proposal and any resulting takeover offer, and will update shareholders in due course."

Aquila has hired Goldman Sachs as its financial advisor, while Deutsche Bank is advising BSRA.

The offer is subject to various conditions, including approvals by Australia’s Foreign Investment Review Board (FIRB).