Resource Pacific cool on Xstrata bid

Xstrata's bid for Resource Pacific looked to be dead in the water yesterday after the Australian coal miner's managing director said it was "unimpressive". The Swiss company had previously increased its bid to about A$1bn (£460m) or A$3.20 per share, an improvement of 12 per cent, but Resource Pacific's managing director Paul Jury was quoted in the Australian press calling the bid a "sign of desperation".

The company has not yet officially rejected the bid but urged shareholders to take no action. If it does turn down the offer, Xstrata has few options after having declared the bid final.

In response to a pair of unsolicited bids, first from the domestic rival New Hope in December and then by Xstrata, Resource Pacific conducted an independent financial assessment suggesting the company was worth between $3.56 and $4.09 per share.

Xstrata is keen to buy the company because its Newpac coal mine sits next to Xstrata's sites in the region. Chief executive Peter Freyburg said the deal was the best option for Resource Pacific shareholders. "Xstrata has a relevant interest in over 18 per cent of Resource Pacific's share capital and there is no competing offer for Resource Pacific," he said. "In the absence of Xstrata's offer, shareholders may face an uncertain future."

Vale, the Brazilian giant, is understood to be readying an offer for Xstrata. Brazil's state development bank indicated last week that the government would not block the company from launching a bid.