Aquila chairman now spoiled for choice

The Aquila chairman Tony Poli may be spoiled for choice with Mineral Resources swooping on a 12 per cent stake.

Aquila chairman Tony Poli may now be spoiled for choice of his empire with Mineral Resources swooping on 12 per cent of his company this morning at a big premium to the Baosteel bid on the table.

Citibank reportedly crossed 49 million Aquila shares at $3.75 a share, or well above the $3.40 a share offer from Baosteel and Aurizon.

The purchase means Mineral Resources’ boss Chris Ellison would control 12 per cent of Aquila, which is more than enough to demand a seat at the table in any talks to settle control of the company.

Aquila’s Poli is due to respond to the Baosteel offer early next week, which will be its first public statement on the company’s attitude to the offer.

Just what Ellison does with his stake remains to be seen, but with Baosteel accounting for 19.8 per cent of the stock and Poli 29 per cent the register is now fundamentally unstable, so something has to give.

The Baosteel camp has expressed frustration at the lack of action on its bid and the proposal to develop a new iron ore project in Western Australia.

Now Poli’s careful consideration looks to be somewhat inspired.

The Baosteel proposal came with an infrastructure offer from Aurizon, which would build the rail and port link for the mine and adjoining territory. This is exactly the sort of work Ellison is looking for, so maybe the Chinese steel company has a new partner in the wings.

The move comes as on the other side of the country in the troubled coal sector BHP has cancelled a $360 million contract with Downer EDI to process its Goonyella Riverside coal mine.

The cancelled contract has spooked punters with Downer’s stock down 10.6 per cent to $4.73 a share in early trading on the Australian Securities Exchange.

Downer has $19.6 billion in work on hand, of which roughly 25 per cent is in the contract mine space, and the fear, maybe an overblown fear, is that more of this work will disappear.

Falling coal prices have forced BHP to cut costs and it will now assume control of the Goonyella operations.

In early trading Aquila was at $3.63 a share, well above the Baosteel offer but below the Mineral Resources share purchase price at $3.75 a share.