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Vedanta buys Asarco for 1.7 bln dlrs
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Vedanta buys Asarco for 1.7 bln dlrs
AFP - Sunday, March 8
NEW DELHI (AFP) - - British metals giant Vedanta announced Saturday it would buy bankrupt US copper miner Asarco for 1.7 billion dollars -- far below the sum it first bid when commodity prices were booming.
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Vedanta Resources Plc' purchase, through its Indian unit Sterlite Industries, would make it one of the world's leading copper producers.
Vedanta, listed on the London Stock Exchange but whose main assets are in India, said the purchase was part of a drive by Sterlite to become a diversified copper producer and gain a North American presence.
Sterlite, India's top copper producer, has "signed a new agreement with Asarco LLC for purchase of substantially all the operating assets of Asarco," a company statement said.
Saturday's price for Asarco -- the third-largest US copper producer -- is 35 percent less than the 2.6-billion-dollar bid Sterlite made last year but walked away from when global copper prices began tumbling.
"This acquisition is in line with our strategy of leveraging our existing skills to become a diversified global copper producer," said Vedanta chairman Anil Agarwal, who also heads Sterlite.
"We are happy we have reached agreement with Asarco on these new terms," said the billionaire businessman, who had been pushing for the deal, calling the US firm a "strategic fit with Sterlite's existing copper business."
The buy would give Sterlite access to "attractive mining assets with long life and geographic diversification" in North America, Sterlite said.
The purchase, which would make Vedanta one of the world's top copper producers with holdings in India, Australia, Zambia and now a significant presence in North America, must be approved by a US bankruptcy court.
"The agreement is subject to the approval of the US Bankruptcy Court," said Sterlite.
Asarco, formerly known as American Smelting and Refining Co and based in Tucson, Arizona, sought bankruptcy protection in 2005 after being sued over environmental clean-up and asbestos claims.
Its Mexican parent, Grupo Mexico, lost control of the unit when a judge named an independent board.
Grupo Mexico opposed Sterlite's previous 2.6-billion-dollar bid for Asarco and since then had fought to regain control of the company. But recent Mexican press reports said it had withdrawn its claim due to market conditions.
Until the court approves the new agreement, expected by April 15, Asarco can solicit other offers under a "go shop" provision.
The sale is part of Asarco's financial reorganisation plan which the bankruptcy court is expected to confirm, allowing the company to end its bankruptcy status.
Sterlite also has activities in copper, aluminium, zinc and lead.
It will assume operating liabilities but not "legacy liabilities" for asbestos and environmental claims, according to a Sterlite statement.
"Reaching this agreement in such difficult economic times" is an achievement, Asarco president Joseph Lapinsky said in a separate statement.
The deal is expected to be closed by July or August, Sterlite said.
The 1.7-billion-dollar purchase involves a cash payment of 1.1 billion dollars. The remaining 600 million dollars will be paid in the form of a cash note, payable over nine years.
The Asarco assets being acquired include three open-pit copper mines, a copper smelter, a copper refinery and a precious metals plant. Its mines have estimated reserves of five million tonnes of contained copper.
For 2008, Asarco posted pretax profit of 393 million dollars on revenues of nearly 1.9 billion dollars.
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A copper mine. British metals giant Vedanta announced Saturday it would buy bankrupt US copper miner Asarco for 1.7 billion dollars -- far below the sum it first bid when commodity prices were booming.
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