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They are making an offer of A$3.40 ($3.15) per share, which values the equity in Aquila at A$1.42 billion ($1.32 billion), according to the Australian coal and iron ore producer’s announcement on Monday May 5.
The offer price is a 38.8% premium over the closing price of Aquila shares on Friday May 2, the last trading day prior to the proposal.
Baosteel and Aurizon will fund the takeover with their existing cash reserves and debt facilities. Baosteel will take up 85% of the Aquila shares, and Aurizon 15%, if the offer is accepted.
The offer is subject to a 50% minimum acceptance condition and other regulatory approvals.
Baosteel and Aurizon have submitted their respective Foreign Investment Review Board (FIRB) applications for the proposed transaction.
Baosteel initially acquired a 15% stake in Aquila in 2009, and raised its shareholding to 19.6% in December 2013.
Aurizon has been growing its iron ore business since 2010, and aims to develop “multi-user, integrated rail and port infrastructure to service mid-tier and junior miners in the Pilbara”.
“Participation in the bid provides a step towards Aurizon potentially participating in the development of infrastructure in the West Pilbara,” the rail freight operator said in a separate announcement on Monday.
Aquila owns a 50% interest in the West Pilbara Iron Ore Project, which has a proposed mining rate of 30 million tpy, and requires development of port and rail infrastructure.
Aquila also has a 50% interest in the Eagle Downs Hard Coking Coal Project in Queensland’s Bowen Basin region, with 254 million tonnes of proven and probable run-of-mine coal.