We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedFinancial Planning

Rio Tinto passes target for £2 billion Riversdale takeover


Mining giant secures 49.49 percent support

Article comments

Rio Tinto is close to taking control of Riversdale Mining after receiving renewed acceptance of its proposed A$3.9 billion (£2 billion) takeover bid.

The company said it would proceed with its plan if it achieved its 47 percent target but that figure has been surpassed and the price on the deal increased.

An extra 50 cents per share will now be paid because Rio improved on its target acceptance level by April 6th, the date set as a deadline for such a rise.

Rio's offer, announced in December, was originally conditional on at least 50 percent acceptances, but it was forced to revise that plan last week after Riversdale's other two top shareholders, Brazilian steel CSN and Tata Steel, declined to sell.

CSN, Brazil's biggest steel maker, has said it has no immediate plans to sell its stake in Riversdale because it sees the asset as “strategic” -- selling the holding would lessen its bargaining power to control coal supplies.

CSN owns 19.9 percent of Riversdale, while Tata, the world's seventh-largest steelmaker, recently increased its stake in the Australian-listed company to 27 percent.

Rio has targeted Riversdale because of its hard coking coal projects in Mozambique, which could eventually supply as much as a tenth of the global market for the key steel-making ingredient.

The bid fits with Rio's strategy of developing large, long-life, low-cost assets, as China and India fuel demand for African coking coal. Reconstruction activities in Japan are likely to increase demand still further.

But the tussle for Riversdale has shown that even miners targeting smaller, bolt-on acquisitions to make use of their cash piles can encounter problems in deals that pit producers against commodity consumers as prices rise.

Coal prices have seen sharp spikes since December in response to floods in Australia, Japan's disaster and Germany's decision to shut 7 megawatts of nuclear power.

Earlier on Wednesday Rio announced a 46.78 percent holding. It had been expected to hit its 47 percent target with the help of passive index funds, who sold their shares into the offer.

The offer price increase from $16 to $16.50 per share also triggered an extension of the offer period until April 20th.

Share:

Comments

Rio Tinto passes target for £2 billion Riversdale takeover
Financial Planning

Budget: What business wants

Budget: What business wants

CFOs are keen for the chancellor to avoid any uncertaintymore ..


Co-operative Group posts £2.5bn loss

Annual loss the worst in its 150 year historymore ..

Google sees 19% rise in Q1 revenue

However, company missed analysts' expectation as ad prices slidmore ..

Starbucks to move Europe HQ to UK

Coffee chain says move reflects growing importance of UK marketmore ..

Stay ahead of the curve

CFOs used to low interest rates ignore working capital optimisation at their perilmore ..

Digital streamlining of travel and expense claims [Part II]

Concur shows CFOs how to make life easier when the auditors come knockingmore ..

Send to a friend

Email this article to a friend or colleague:


PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.



In Depth
How M&A teams can create value by challenging the CEO

How M&A teams can create value by challenging the CEO

A typical “hold” period of nine to 18 months can generate increased sale value more ..

In Depth
What every company needs to do about big data?

What every company needs to do about big data?

In the first of a three part series, Pat Brans explores just how big 'big data' will get? more ..

Advertisement

* *