Final bells ring on takeovers

Sherritt International (S-T) and the Labrador Iron Ore Royalty Income Fund (LIF.UN-T) emerged victorious in the industry’s two most recent takeover battles.

Sherritt and its partner, the Ontario Teachers’ Pension Plan, reached an agreement with their quarry, the Luscar Coal Income Fund (LUS.UN-T), that will see the Sherritt Coal Partnership take control of Luscar.

Sherritt, which had offered $3.50 cash or a cash-plus-shares combination valued at about $3.46 for Luscar fund units, agreed to bump its offer to $4 per unit cash, or one Sherritt share (valued at $4.18 at presstime). Sherritt and the Pension Plan will also be redeeming Luscar’s $100-million convertible debenture issue for cash.

The deal gives Sherritt control of 11 coal mines, which are mainly steam-coal and lignite producers in western Canada. Luscar also has one large coking-coal project, the Cheviot mine, under development in northern Alberta.

In the other bout, Rio Tinto (rtp-n) walked away from a takeover offer made for the Labrador Iron Ore Royalty Income Fund after too few unit-holders tendered their shares. Rio had offered $14.25 for units of the Fund, which owns an 18.9% interest in Rio’s 56%-owned subsidiary, Iron Ore Co. of Canada, operator of the large iron mines at Labrador City.

Rio closed its offer on April 21 after taking up 1.6 million units tendered under the offer. With 4.3 million units bought on the open market, Rio now holds a 20.3% interest in the Fund.