Mineral Resources (MIN) has dropped its takeover for Aquila Resources, leaving the target's board to recommend the $1.4bn bid by rivals Baosteel and Aurizon to shareholders.
Mineral Resources recently purchased a 12.78% stake in Aquila and subsequently held discussions about an all scrip off-market bid for remaining Aquila shares at a proposed price of $3.75 per share.
However, the parties were unable to agree the terms of the proposed bid and have terminated discussions.
The board of Aquila said it had reviewed both bids and concluded that Mineral Resources bid was not superior to the $3.40 per share cash bid lobbed by Baosteel and Aurizon and recommended shareholders accept the latter offer.
Baosteel and Aurizon said they would not raise their offer and had threatened to walk away from the takeover, leading to a 12 per cent slump in Aquila's shares last week.
Investors in Aquila responded well to the developments. At 10.30am (AEST) Aquila shares were 7.03% higher at $3.35, against a benchmark index slip of 0.1%.
Executive chairman of Aquila Tony Poli, who has a 28.92% relevant interest in the group said he intends to support the Baosteel/Aurizon offer in the absence of a higher offer.
As a result of the developments, ASIC has granted Aquila an extension on the date it must provide a target statement to shareholders to June 26.