Rio Tinto launches bid for Riversdale
By Sonali Paul |
December 7, 2010, Tuesday
|
Print Edition
Print Edition
ANGLO-AUSTRALIAN miner Rio Tinto has made a US$3.5-billion bid for Africa-focused Riversdale Mining, sending the target firm's shares up 16 percent and setting up a possible takeover battle.
Rio's move on Australia's Riversdale is likely to spark a bidding war, as the company has hard coking-coal projects in Mozambique that could eventually supply 5-10 percent of the global market for the key steel-making material.
Brazil's Vale is seen by some analysts as the most likely rival bidder, as it already has coal mines nearby in Mozambique. India's Tata Steel, Riversdale's top shareholder, was also seen as a potential bidder.
Xstrata Plc, Anglo American and Peabody Energy could also be interested. Top coking-coal exporter BHP Billiton is seen as a less likely contender, as it has its own growth options in Australia.
Xstrata and Anglo declined to comment.
The company's fourth-biggest shareholder, Australian investment firm LinQ Management, expects Riversdale to be hotly contested, given the scarcity of good quality coking-coal assets and booming demand from China and India for the commodity.
"It's in a good part of the world for accessibility, and we think there's plenty of further improvement for whoever's interested in buying it. Hopefully there will be other interested suitors coming to the table," LinQ Managing Director Clive Donner said.
Riversdale confirmed media reports that Rio was talking about an offer around A$15 (US$14.7)a share for Riversdale, which would value the group at A$3.5 billion, only a 6 percent premium on Riversdale's close on December 3.
Rio's move on Australia's Riversdale is likely to spark a bidding war, as the company has hard coking-coal projects in Mozambique that could eventually supply 5-10 percent of the global market for the key steel-making material.
Brazil's Vale is seen by some analysts as the most likely rival bidder, as it already has coal mines nearby in Mozambique. India's Tata Steel, Riversdale's top shareholder, was also seen as a potential bidder.
Xstrata Plc, Anglo American and Peabody Energy could also be interested. Top coking-coal exporter BHP Billiton is seen as a less likely contender, as it has its own growth options in Australia.
Xstrata and Anglo declined to comment.
The company's fourth-biggest shareholder, Australian investment firm LinQ Management, expects Riversdale to be hotly contested, given the scarcity of good quality coking-coal assets and booming demand from China and India for the commodity.
"It's in a good part of the world for accessibility, and we think there's plenty of further improvement for whoever's interested in buying it. Hopefully there will be other interested suitors coming to the table," LinQ Managing Director Clive Donner said.
Riversdale confirmed media reports that Rio was talking about an offer around A$15 (US$14.7)a share for Riversdale, which would value the group at A$3.5 billion, only a 6 percent premium on Riversdale's close on December 3.
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