DEACONS IS celebrating after a long and hard-fought battle ended with success last week, as the Chinese Government-owned Sinosteel Corporation acquired a significant stake in WA iron ore mining company Midwest Corporation.
The deal marks the conclusion of the first successful hostile takeover by a Chinese state-owned enterprise anywhere in the world. Iron ore traders Sinosteel launched the $1.48 billion takeover bid in March. At the close of the deal last week Sinosteel was left with with 98 per cent of the company.
The deal was led by Deacons partners Ian McCubbin, Shaun McRobert and James Stewart in a transaction that saw Sinosteel compete with Murchison Metals for control of Midwest, with Murchison’s “reverse takeover” proposal ultimately defeated by the Sinosteel offer.
McRobert said that given the geo-political economic factors, the international focus, and the number of players, it was only natural that the deal should receive the attention it did. “It’s also a great story. It would make a great book,” he said.
It was also significant, said McRobert, to note how Sinosteel was able to deal with this type of transaction — with multiple bidders, a hostile environment, and a need to move quickly and move forward on strategy in line with all regulatory aspects of the market.
He said the deal was also pertinent to a global market that hasn’t been too kind to M&A activity. “It’s obviously an interesting market today, and there have been a lot of ups and downs in terms of the transaction itself, especially with the other parties involved,” said McRobert.
With a number of different teams involved, co-ordinating the work was of paramount importance and, given the need to preserve confidentiality in Perth, this had to be undertaken in Beijing, Sydney and Melbourne.
Constant media attention on the deal also needed to be co-ordinated, McRobert said, and with the help of media consultants Third Person, Deacons navigated the full range of the media cycle, from the positive, to the controversial and finally, the conclusion.
For Deacons, the deal marks a successful run in their M&A practice, which they have been building over the last three years. “It has been gradually building,” said McRobert. “We have done a couple of script bids and we’ve been doing quite a bit of M&A advice — we also worked with a lot of investment banks in Perth.”
Murchison was represented by Franklyn Legal, and Midwest by Hardy Brown, with assistance from Minter Ellison.