ASX: Does Fortescue consider the information disclosed in the First Announcement to be information that a reasonable person would expect to have a material effect on the price or value of its securities? Fortescue: NoOf course two of the world’s four biggest iron ore producers getting together is price-sensitive. Fortescue even labelled it as such with the red dollar sign next to its initial announcement, as you can see here. The Vale deal raises many questions. Is Twiggy prepared to give up control? After looking over the cliff in recent months, with record-low iron ore prices, there is nothing stopping him personally selling a 15% stake in Fortescue to Vale. The language all refers to selling existing shares to Vale, not doing a selective placement, as occurred when Chinese steel mill Hunan Valin came on the scene with its 15% stake. The rumours, speculation and scenario guessing is endless. Why issue a statement at 8.26am yesterday followed by a press briefing at 8.30am with no formal engagement with analysts who cover the stock? The stunning nature of yesterday morning’s announcement took everyone by surprise. There was the joint-venture blending deal, which was a big enough shock, but bigger was this suggestion: “The agreement also provides a framework for potential investment by Vale in Fortescue through a minority acquisition of shares on market and/or investment in current or future mining assets.” This simultaneously opens the door to everything and nothing. Chinese government competition regulators are already lining up to probe the arrangement and could very well oppose it. After banging the nationalistic drum for years, it is also amazing that Twiggy is now proposing a deal with Vale to take on BHP and Rio Tinto. A year ago he was playing the "Aussie battler card" and attacking BHP and Rio Tinto for selling out the industry, urging the federal government to "do something" and complaining about the policy of the two companies to produce as much ore as possible while driving down costs. A year on and the company and Forrest propose to climb into bed with the biggest non-Australian producer in Vale, which was also producing as much ore as possible as it could last year. A vague dalliance with Vale will attract regulatory attention across the world, and the ASX is absolutely right to go hard about the disclosure practices that unfolded over the past two days. ASIC may have lost previous expensive battles with Twiggy, but it should also weigh in on this one. The ASIC probe into Leighton and Hochtief share trading two years ago produced this amazingly detailed insight into all the communications. It would be very useful if ASIC and its equivalent regulator in Brazil could produce something similar to flesh out just how this FMG-Vale pseudo-marriage evolved.
Just what is going on with Twiggy’s new Vale deal?
Fortescue has cosied up to Brazilian miner Vale, which seems to have exactly the strategy Andrew Forrest supposedly hates, write Glenn Dyer and Stephen Mayne.