Baosteel and Aurizon launch $1.4 billion bid for Aquila

China’s Baosteel Group Corp. and its partner Aurizon Holdings (ASX: AZJ) launched a bid Monday to acquire Australian iron ore and coal miner Aquila Resources (TSE, ASX: AQA) in a A$1.4 billion ($1.3 billion) deal.

China’s largest steelmaker Baosteel and Australia’s biggest freight company Aurizon is offering to pay A$3.40 a share in cash, a 39% premium to Aquila’s closing price on Friday.

Aquila shares rocketed 39% to a high of A$3.41 and closed at A$3.34 Monday.

Baosteel currently owns 20% of Aquila. According to Baosteel, the company invested in Aquila in 2009 to help fund its iron ore project and a separate coking coal mine. Aquila is involved in several projects in Australia and South Africa.

If successful, Baosteel will own as much as 85% of the company with Aurizon holding the balance.

This offer may signal a resumption of Chinese companies buying up global resources in the midst of a price slump, according to Bloomberg. The iron ore price is down almost 20% this year, while coking coal is trading at prices last seen during the financial crisis.

The company has appointed Goldman Sachs as financial advisor for the deal.