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Brazilian miner Vale (NYSE: VALE) has launched a public offer to acquire 100% of compatriot copper products producer Paranapanema (Bovespa: PMAM3) in a deal expected to total 2.01bn reais (US$1.14bn), Vale said in a statement.
The transaction is subject to the purchase of at least a 50% stake plus one common share, and the auction will be held on September 1.
The price has been set at 6.30 reais per share, a 22.3% premium on the average closing prices of the last 90 days. The price will be adjusted in case of payment of dividends or interest on shareholders' equity, according to the statement.
Paranapanema's assets in Brazil include a copper smelter and refinery, and three production plants of downstream copper products. The company also has a 99% stake in Cibrafertil, which has a phosphate fertilizer plant.
The offer is part of Vale's strategic plan to become one of the world's main copper producers in the medium term. The miner currently has a production capacity of 300,000t/y at its Sossego mine in Para state, as well as the production of copper as a nickel byproduct at Canadian units Sudbury and Voisey's Bay.
The miner is developing two other copper projects: Salobo, in Carajas (Para state), with capacity of 100,000t/y; and Tres Valles, in Chile, with capacity of 18,000t/y, with start-ups in 2011 and 2010, respectively.
The Konkola North project in Zambia, with capacity of 40,000t/y, will start this year.
Future copper initiatives include Salobo brownfield expansions (Salobo II and III) and the development of projects currently in less advanced stages.