Mitsui may trump BHP's $332m Caemi bid

BHP is the world's third-largest iron ore miner.

MELBOURNE, Australia -- Australia's BHP may find its $332 million bid for Brazilian iron ore miner Caemi trumped by a rival offer from Japan's Mitsui and Co.

Mitsui confirmed it may yet exercise an option to buy Caemi, thus blocking a bid by BHP, the world's third largest iron ore miner, to buy the 20 percent stake in Caemi held by Mario and Guilherme Frering.

Asked about reports that Mitsui is preparing to exercise its pre-emptive rights to acquire Caemi in an effort to thwart the bid by BHP, a spokesman for the Japanese company said such a move could happen.

"It is possible to do so because this is one of the various options," the spokesman said.

Three-way not an option

In Melbourne, BHP said a broader partnership that would include Mitsui, BHP, and CVRD would not be inconsistent with the company's goal of finding the right partners to maximize shareholder value.

Mitsui, which holds a 40 percent equity stake and controls 40 percent of Caemi's voting capital, says it still has around 50 days to match BHP's bid.

If successful in acquiring the 20 percent equity stake, BHP would also tender to buy the 40 percent publicly held equity for about $275 million, to win 60 percent equity control of Caemi.

Hiroshi Tada, chief operating officer of Mitsui's iron and steel raw materials group, told the Financial Times newspaper that Mitsui's main concern was whether Mitsui's mining operations could be carried our smoothly without a Brazilian equity partner.

"There are environmental issues, local government issues and national government issues involved that require negotiations," the FT quoted Tada as saying.

Brazilian partner preferred

After exercising its pre-emptive rights, Mitsui would prefer to have a Brazilian equity partner in Caemi, Tada said. The world's largest iron ore miner, Brazil's Companhia Vale do Rio Doce (CVRD), would be a leading candidate, he said.

If Mitsui were to block BHP's bid to buy into Caemi, it would deal a blow to BHP's strategy of becoming the one-stop shop for steelmakers worldwide for their coking coal and iron ore needs.

While BHP's acquisition of Caemi hinges on Mitsui, analysts have said Mitsui could exercise its right to acquire Caemi and then decide to enter into a broad partnership with CVRD and BHP, or just with CVRD.

Soon after BHP announced its offer, a CVRD source said the company could still buy part of Caemi through an agreement with Mitsui that guarantees it nearly 33 percent.

Reuters contributed to this report.

BHP
Mitsui & Co. USA Main Menu Mitsui USA

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.