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Bid Launched For Major Stake In Australia’s Biggest Company

February 4, 1986

SYDNEY, Australia (AP) _ An Australian investor on Tuesday launched a $2.80 billion (U.S.) partial bid for Broken Hill Proprietary Co. Ltd. that would give him nearly 40 percent of Australia’s biggest company.

The offer was not unexpected by observers of Australian industry. The investor, Robert Holmes a Court, tried unsuccessfully to buy all of Broken Hill two years ago and had since accumulated an 18.8 percent stake in the company.

One of Holmes a Court’s investment companies, Bell Resources Ltd., offered 7.70 Australian dollars, or $11.17 at the current exchange rate, for 250 million Broken Hill shares, or an additional 20 percent of the total outstanding.

The Australian dollar was quoted at $1.45 in foreign exchange trading Tuesday.

As an alternative, Holmes a Court offered to exchange one Bell Resources share and 2.50 Australian dollars, or $3.63, for each of the 250 million Broken Hill shares.

Officials of Broken Hill, a major oil, mining and steel concern, indicated they considered the investor’s proposal as priced much too low.

In a statement, Broken Hill Chairman Sir James Balderstone said his company’s board met Tuesday to consider the offer ″from the standpoint of the interests of our shareholders,″ and said ″we think it (the bid) borders on being an insult to them.″

Broken Hill earned $1.09 billion on sales of $10.2 billion in the year ended May 31, 1985, based on the current exchange rate. In 1984, Broken Hill acquired Utah International Inc., a natural resources concern, from General Electric Co. for $2.4 billion.

Analysts, noting that Holmes a Court placed several conditions on the bid to ensure it could be withdrawn at any time, speculated that the offer might in part be aimed at determining what steps Broken Hill is willing to take to keep its independence.

″This bid is very much testing the water ... to force BHP to show its hand,″ said Stewart McKibbin, research manager with the investment firm A.C. Goode & Co.

Norman Miskelly of the brokerage firm Ord Minnett Ltd. said ″it may be that Holmes a Court is fed up with all the verbal battles″ with Broken Hill. ″Now he’s shaking the trees to see what comes out.″

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