Atlas Iron shares have surged after the junior miner agreed to a $280 million takeover offer by rival iron ore miner Mineral Resources.
Mineral Resources is offering one share for every 571 Atlas shares in a deal that offers a 59 per cent premium to Atlas’s closing price on April 4.
Atlas’s board urged shareholders to support the deal and the company’s shares jumped 42.1 per cent, or 0.8 cents, to 2.7 cents on Monday.
Shareholders will vote on the scheme at a meeting expected in July.
Mineral Resources managing director Chris Ellison said the company has the balance sheet required to rapidly develop Atlas’ assets and the combination of both organisations’ Pilbara iron ore assets would allow them to drive down costs.
Lower costs have become a focus for lower-grade ore miners as the price for those ores has dropped in the wake of China’s move to higher-grade product.
“Creating a sustainable iron ore operation enables us to protect Western Australian jobs and ensures that our consolidated iron ore operation in the Pilbara continues to deliver a range of social and economic benefits to Western Australia,” Mr Ellison said.
He also said Atlas’ senior leaders will be integrated into the wider business.
Mineral Resources’ shares ended the day down $1.19, or 6.9 per cent, at $16.05.