In early May, Norilsk Nickel offered 5.3 billion Canadian dollars ($4.77 billion) for 100% of LionOre shares, beating Xstrata’s offer of $4 billion. The latter had until May 14 to think about it, and decided to continue bargaining. Yesterday, Xstrata announced that it had raised its offer to buy LionOre from 18.5 to 25 Canadian dollars per share. Based on Xstrata’s new offer, all of LionOre is valued at 6.2 billion Canadian dollars ($5.6 billion). The offer is valid until May 25.

This is 35.1% better than its previous bid and exceeds Norilsk Nickel’s offer by 16.3%, Xstrata calculated.

A Norilsk Nickel representative did not say whether his company would raise the price. LionOre representative Alex Buck told Vedomosti that the company had not yet received a response from Norilsk Nickel. “We will study each new offer, but at the moment the board of directors has recognized Xstrata’s offer as the best,” she said.

LionOre's board of directors had previously recognized Norilsk Nickel's offer as the best, but has now withdrawn that decision. If LionOre's board changes its position again and recommends that shareholders accept another offer, the company will have to pay a fine of 305 million Canadian dollars, Xstrata said in a statement. The company also said that it has already received approval for the deal from the Canadian Ministry of Industry.

Deutsche UFG analyst Alexander Pukhaev admits that another offer from Norilsk Nickel is possible. “But the company will have to raise the price by at least 20% compared to the first offer.” There is some sense in this, the expert believes, but this deal can no longer be called cheap. Aton analyst Vladimir Katunin doubts that Norilsk Nickel will beat Xstrata’s offer, and if it does raise the price, it will not be by much – by about 5% compared to the competitor’s offer. LionOre was one of the most undervalued companies, but now its price has increased by more than 30%, he explains.

Following Xstrata's announcement, LionOre's market capitalization on the London Stock Exchange rose by 12.75% (to $5.37 billion). On the Toronto Stock Exchange, LionOre shares gained 13.88%.

Xstrata beats Norilsk Nickel