MAC: Mines and Communities

Rio Tinto wins Riversdale's coal

Published by MAC on 2011-01-31
Source: Reuters

In the most important mining takeover yet this year, Rio Tinto is set to acquire Australia's Riversdale which has mines in Mozambique and other projects in southern Africa.

As MAC pointed out last December:

"Rio Tinto's initial US$3.5 billion offer for Riversdale is likely to be increased. But the UK-Australian company could yet be out-matched by other bidders; or Rio may bed down with a partner".

And the bid was indeed increased - to US$3.9 billion and Tata Steel's representative on Riversdale's board voted in its favour. The Indian steel conglomerate is now likely to forge an agreement with Rio Tinto, to secure enhanced supplies of its own.

As we also said five weeks back: "If a deal eventuates, it would doubtless rank as one of the most significant of its kind since the 2008-2009 credit collapse - and certainly in Africa". See:Rio Tinto battles for new copper, gold and coal

Thumbs-up from Riversdale coal for Rio Tinto's $3.9bn bid

By Sonali Paul and James Regan


24 January 2011

MELBOURNE - The board of Africa-focused coal miner Riversdale , including a representative from top shareholder Tata Steel , unanimously backed a $3.9 billion takeover offer from Rio Tinto , Riversdale said on Monday.

Riversdale, coveted for its coking coal projects in Mozambique, said it was unaware of any other takeover offers in the works, even as an Indian state consortium said it had deferred to Jan. 27 a decision whether to make a bid.

"As of today, no superior proposal has been received by Riversdale and the company is not aware of any party having an intention to make such a proposal," Riversdale said in a statement after releasing its official response to Rio's bid.

While Tata Steel's representative on Riversdale's board backed Rio Tinto's offer, Riversdale said the vote was not an indication of Tata Steel's intention with its Riversdale stake.

When the deal was first announced in December, Tata's board representative N.K. Misra abstained from voting on the offer and Riversdale said the new vote was made in the capacity as a Riversdale board member.

Riversdale's shares last closed at A$16.31, just 1.9 percent above Rio's offer of A$16 a share, indicating investors do not expect a higher offer to emerge.

Riversdale's two biggest shareholders are steel makers who are primarily interested in locking in coking coal supplies. Tata Steel owns 24.2 percent, while Brazil's CSN owns 16.29 percent.

Riversdale's third-largest shareholder Passport Capital has been trimming its stake from 15.69 percent over the past few weeks, indicating it is prepared to sell into the offer, which is due to close on Feb. 18.

Riversdale said talks with its Chinese shareholder Wuhan Iron & Steel Corp over acquiring a stake in the Zambeze coal project in Mozambique have been suspended while Rio's offer remains on the table.

(Editing by Balazs Koranyi)

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