JSW buys Canadian coal company
India Inc. made yet another entry into resource-rich Canadian market, with JSW Energy buying the Canadian coal company CIC Energy for $422 million.world Updated: Nov 24, 2010 14:22 IST
India Inc. made yet another entry into resource-rich Canadian market, with JSW Energy buying the Canadian coal company CIC Energy for $422 million.
The deal at $7.42 a share has been given the green signal by the board of CIC Energy, which is listed in both Toronto and Botswana in southern Africa.
In Botswana, CIC Energy operates the Mmamabula coal and power station project.
The deal is JSW's second acquisition in the coal sector in southern Africa within a year. Earlier, the Indian company had acquired a stake in South African Coal Mining Holdings.
The JSW offer to the Canadian company marks a 203 per cent premium over the average trading price for CIC Energy shares on the Toronto Stock Exchange for the 30-trading day period ending Sep 14 - the day before the company received takeover proposal.
However, the $7.42 per share offer is below the non-binding $7.75 that the Canadian energy company received last month.
"We believe that the terms of this offer provide fair value for CIC Energy shareholders in the current environment," CIC CEO Warren Newfield said in a statement after the JSW offer.
"With South Africa's increasingly apparent shift in energy policy the outlook for coal-based power producers looking to supply South Africa has weakened," Newfield added.
JSW joins the Aditya Birla Group, Vedanta and the Tata Group to enter the Canadian resource market over the past two to three years.
While the Tatas own the iron-ore Millennium Corporation in Nova Scotia province, the Aditya Birla Group controls an iron ore mine near St. Johns.
Vedanta has bought a stake in Manitoba-based HudBay Minerals.