Indonesia's Bumi wins battle to Australian Herald

Indonesia's Bumi wins battle to control Herald

By Lisa Murray in Jakarta

Published: July 18 2008 03:00 | Last updated: July 18 2008 03:00

Bumi Resources, Indonesia's biggest coal miner, yesterday won control of Australia's Herald Resources, ending a seven-month take-over battle to secure zinc and lead mines.

The Indonesian miner said it had secured a 51.3 per cent stake in Perth-based Herald, after rival bidder Aneka Tambang (Antam) and its Chinese partner pulled out of the race and agreed to sell their shares.

Bumi's final offer of $2.85 a share is 27 per cent higher than its initial bid last December and values the company at A$563m ($550m).

Herald owns 80 per cent of the Dairi project in North Sumatra, Indonesia, and the remaining 20 per cent stake is owned by Antam.

Investors said that Bumi had paid a high price for Herald because while the Dairi project had significant reserves, it had not yet received all of the necessary regulatory approvals.

Zinc and lead prices have also more than halved over the past 18 months.

"I think it was quite expensive in the end," said Rezza Zulkasi, a fund manager at First State Investments Indonesia.

"I don't think it adds a lot to Bumi's valuation but the company's focus is on diversification, so I think they wanted to buy it at any price."

Dairi has about 10 years of lead and zinc reserves, according to Herald.

The company applied for approval from the forestry ministry almost three years ago but has yet to receive the green light to begin work on the underground mine.

Bumi is controlled by Abruzial Bakrie, a government minister and Indonesia's richest man.

People close to Antam, which was bidding with Chinese company Shenzhen Zhongjin Lingnan Nonfemet, said its management team had been increasingly concerned about the declining prices of zinc and lead.

Copyright The Financial Times Limited 2008