Fortescue (ASX:FMG) said it would acquire Red Hawk Mining (ASX:RHK) for a cash consideration of AU$1.05 per share in an off-market takeover bid, according to an Australian bourse filing on Tuesday.

Fortescue's wholly-owned unit FMG Pilbara will acquire all of Red Hawk's fully paid ordinary shares, and the consideration will rise to AU$1.20 per share if the unit acquires a stake of 75% or higher in Red Hawk within seven days, the filing said.

The board of Red Hawk recommended that the shareholders accept the offer. The board obtained an independent expert's report from BDO Corporate Finance (WA), which concluded that the offer is fair and reasonable to Red Hawk shareholders.

FMG Pilbara also entered into call options over 19.99% of Red Hawk shares with substantial shareholders TIO (NZ) and OCJ Investment (Australia) on the same pricing terms as the offer.

The offer will close on March 3, per the filing.

Red Hawk owns the Blacksmith iron ore project in Western Australia, with a mineral resource estimate of 243 million tonnes grading at 59.3% iron.

Red Hawk shares soared 46% in early trading on Tuesday to a three-year high.