MIM boss against el cheapo bid

But the price is at the bottom end of an independent valuation and the MIM managing director opposes the bid.

Under a proposed scheme of arrangement, Xstrata would pay $1.72 a share for MIM, which values the company at $3.4 billion. It would also assume some $US894 million ($1.5 billion) in debt, with Xstrata planning to raise $US1.4 billion through a rights issue to help fund the acquisition.

The deal would vault Xstrata ahead of Anglo American as the world's third largest exporter of coal and allow chief executive Mick Davis to reduce his exposure to South Africa, where the group has 43 per cent of its assets.

The MIM board will recommend the scheme without the support of well-regarded managing director Vince Gauci, who did not attend yesterday's tense analyst and media briefing and believes the offer does not fully value the company.

MIM chairman Leo Tutt, who is also the chairman of soon-to-be-floated insurer Promina, said Mr Gauci was ``entitled to his own view" but ``it was a unanimous agreement by all the non-executive directors.

``Shareholders get to vote and any potential other person can make an offer in this period," he said.

While the bid is at the lower end of independent expert Grant Samuel's $1.70 to $2.24 valuation, Mr Tutt said the board had sought alternative offers but none would deliver the same value as the Xstrata proposal.

Resources giants Anglo, Rio Tinto and BHP Billiton have been reported as looking at MIM's assets in recent months.

Mr Tutt said Grant Samuel had concluded the cash offer was fair and in shareholders' best interests. The offer represented a 38 per cent premium to the MIM share price before the existence of the talks was made public on November 21.

Sources close to the deal said much of the independent expert valuation's ``upside" rested on MIM's untested operations and defended the scheme, saying Xstrata needed the certainty of such an arrangement in order to fund the deal.

Shareholders will have to wait until later this month to read the offer's information memorandum and details of the independent expert's report. For the acquisition to proceed, it must be approved by a majority of shareholders who attend the scheme meeting in June and at least 75 per cent of the total number of shares voted.

About 30 per cent of the MIM registry is thought to be held by short-term arbitrageurs who are expected to vote in favour of the proposal. Institutional fund managers said that without full details it was too early to make a call about the price.

They were less coy about Mr Tutt's briefing. ``It was a very interesting presentation," said one fund manager who did not want to be named. ``I can't remember the last time there was a takeover announced and there was no formal presentation, no managing director and you have to wait two to three weeks for some information."

Xstrata said cost savings of some $US45 million had been identified for the first full financial year and did not rule out the deal would mean possible job cuts at MIM's head office. Xstrata's 40 per cent shareholder, Glencore, plans to take up its full entitlement under the rights issue.