Aurizon, Baosteel to buy Aquila after raising stake

Chinese steel company Baosteel Resources and Australian rail operator Aurizon Holdings said on Wednesday they will make a compulsory acquisition of Aquila Resources after raising their joint stake to over 90 percent.

The two companies recommended in a joint statement that investors accept the offer "as soon as possible." The offer closes on July 25.

Baosteel wants to develop Aquila's $7 billion West Pilbara Iron Ore mine, rail and port project, with Aurizon.

Baosteel, which owned 20 percent of Aquila until June, has been trying to get the West Pilbara Iron Ore project under way since it first bought into Aquila in 2009. After losing patience, it decided to make a bid for the company with Aurizon.

It warned in June it would not raise or extend its offer, and said that if the bid failed it would not back the West Pilbara project and may dump its shares in Aquila.

Aquila has advised shareholders to accept the Baosteel-led offer valuing the company at $1.3 billion, a surprise move after it had rejected a higher bid from mining contractor Mineral Resources.

"We...look forward to working with Aurizon, state and federal governments, and Aquila's joint venture partners to progress the development of the West Pilbara Iron Ore Project and the Eagle Downs Hard Coking Coal Project," Baosteel Chairman Dai Zhihao said in a statement on Wednesday.

Aquila shares have risen more than 38 percent since the offer was announced on May 5 but have traded flat after Aquila accepted Baosteel's joint bid in June.