AN Indian newspaper report tipping that a USD 500 million takeover bid for ASX listed Northern Iron was in the wings sent the group shares 13% higher recently to USD 1.085 before it went into a trading halt.

Norwegian iron ore producer Northern did not confirm or deny the reports in its request to for the trading halt which followed a price rise query. It is expected to response today. The action was triggered by the report in the Economic Times of India that the country Aditya Birla Group had made a non-binding bid to acquire Northern for the suggested USD 500 million.

The paper cited a source at Aditya Birla as saying that "We are in the process of examining the mines, it looks like an attractive asset."
Talk of a bid for the company, which owns the Sydvaranger iron ore mine in northern Norway, follows the company launching a strategic review in December.

Sydvaranger produces 2.8 million tonnes of magnetite concentrates a year. A study is under way to consider an expansion to 5.8 million tonnes a year, at a cost of more than USD 250 million. The project has suffered from operational problems, forcing an increase in the group debt position. Foster Stockbroking told clients yesterday that Northern was fully priced and that given there was no guarantee the non-binding bid would materialize, clients should sell.

Source - The Australian

(www.steelguru.com)