Updated from 1:47 p.m. EDT
took off Tuesday, climbing more than 40% after Canadian mining company
offered to acquire the company in a deal valued at $1 billion.
However, Rio Algom officials said Noranda's deal was an unwelcome advance, arguing that its shareholder rights plan prevents such a bid from being consummated.
The plan is designed to provide Rio Algom with "sufficient time to pursue other alternatives" to create wealth for shareholders, the Toronto-based company said.
"If an offer is received, Rio Algom's board will review it and respond in the appropriate manner," Gordon Gray, Rio Algom's chairman, said in a statement. "The company is on a growth program aimed at achieving a 15% return on equity over the cycle, and is committed to maximizing value for shareholders."
Noranda had said it would exchange $16.55 in cash for all of Rio Algom's 60.6 million outstanding shares, adding that it already owns about 9% of the company's stock. The deal represents a nearly 35% premium above the company's closing price Monday of $12.50. Those figures are based on a currency exchange rate of 1.48 Canadian dollars for each U.S. dollar.
Rio Algom finished Tuesday regular trading up 5 5/8, or 46%, at 17 13/16, after reaching a 52-week high of 17 7/8.
Noranda said the acquisition proposal largely is aimed at increasing its copper production and copper reserves. Noranda also highlighted the premium for shareholders of Rio Algom, a mining and metals distribution company.
Noranda, also based in Toronto, said it had agreed to sell a 50% stake in Rio Algom's assets to
, a copper-producing giant owned by the country of Chile, for the same price paid by Noranda. The two companies would jointly manage the assets.
Noranda's offer depends on the acquisition of at least two thirds of Rio Algom shares and the approval of regulators. In addition, Rio Algom's board must waive the application of its shareholder rights plan, Noranda acknowledged.