Last Updated : 03 September 2009 at 16:05 IST

Copper giant Sterlite loses battle for Asarco

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MUMBAI (Commodity Online): Sterlite, India’s largest copper maker, has finally lost the battle for beleaguered US copper miner Asarco.

This week, a US bankruptcy court rejected Sterlite Industries’ bid to acquire Asarco, six months after the Indian company had signed a pact to acquire Asarco.

The bankruptcy court in Texas recommended the offer of Grupo Mexico — only rival of Sterlite — over the Indian company’s bid. However, the case has been sent to the US district court judge Andrew S Hanen in Texas for a final decision.

According to analysts, Sterlite does not stand a chance of acquiring the assets of Asarco.

Asarco, the US’ third-largest copper producer, which filed for bankruptcy in 2005, has about 5 million tonne of copper reserves and produced 235,000 tonne of refined copper in 2007.

Its acquisition would have boosted Sterlite’s copper strengths. Sterlite has a stake in Zambia’s Konkola Copper Mines.

Sterlite had signed a memorandum of understanding (MoU) in March to acquire the assets of Asarco for $1.7 billion that attracted a rival bid from Grupo Mexico, former parent of Asarco.

Since then, both the parties revised their bids several times. Grupo Mexico’s latest offer comprised $2.2 billion in cash and a $280 million one-year note payable to the asbestos creditors. On the other hand, Sterlite’s latest offer was valued at $2.1 billion, including participatory note of $208 million. Grupo has been trying to regain control of Asarco ever since it lost it a decade ago.

Sterlite has been chasing Asarco since last year. It had offered $2.6 billion last year to buy the assets of Asarco, but backtracked in the wake of the meltdown in the global commodity markets. Asarco also offered $2.7 billion in cash and $440 million in creditor guarantees last year to buy the entire Asarco. In fiscal 2008, Asarco had revenues of nearly $1.9 billion and $393 million in profit before tax.

The company filed for bankruptcy in 2005 amid more than $1 billion in environmental claims.