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Rio seeks to buy Riversdale for US$3.9b
Source: Agencies |
December 24, 2010, Friday
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ANGLO-AUSTRALIAN miner Rio Tinto offered US$3.9 billion to buy African-focused coal miner Riversdale in an agreed deal that is likely to be challenged by rivals seeking to secure coking coal reserves.
Rio's first big acquisition since its ill-timed Alcan buy in 2007 is a play on soaring Asian demand for the key steel-making ingredient, but needs the backing of at least one of Riversdale's three large shareholders, including India's Tata Steel and Brazilian steel group CSN.
While fund managers said the steel makers may oppose Rio's offer, Riversdale's Managing Director Steve Mallyon told Reuters he expected a positive response.
The company's third largest shareholder, United States-based fund Passport Capital, had committed an unspecified number of its shares to a pre-bid agreement that gives Rio Tinto options over 14.9 percent of Riversdale's stock, Mallyon said.
"There has been no reaction either way although Passport has put some of its shares into the pre-bid agreement," Mallyon said. "I would think the reaction from CSN and Tata would be generally positive."
Tata Steel, whose Riversdale board nominee abstained from voting on the bid, declined to comment.
Rio, which wants access to Riversdale's coking coal deposits in Mozambique, increased its offer to A$16 (US$16.07) per share in cash yesterday from an earlier indicative bid of A$15.
Resuming trade after a two-day suspension, Riversdale's shares closed 1.7 percent firmer at A$16.57, indicating investors were expecting a higher offer.
"I think there is a strong potential (for rival bids)," said Andrew Harrington, an analyst at Paterson Securities in Sydney.
"There aren't that many big new coking coal assets out there and this one is very large and it's near to production," he said.
Rio's first big acquisition since its ill-timed Alcan buy in 2007 is a play on soaring Asian demand for the key steel-making ingredient, but needs the backing of at least one of Riversdale's three large shareholders, including India's Tata Steel and Brazilian steel group CSN.
While fund managers said the steel makers may oppose Rio's offer, Riversdale's Managing Director Steve Mallyon told Reuters he expected a positive response.
The company's third largest shareholder, United States-based fund Passport Capital, had committed an unspecified number of its shares to a pre-bid agreement that gives Rio Tinto options over 14.9 percent of Riversdale's stock, Mallyon said.
"There has been no reaction either way although Passport has put some of its shares into the pre-bid agreement," Mallyon said. "I would think the reaction from CSN and Tata would be generally positive."
Tata Steel, whose Riversdale board nominee abstained from voting on the bid, declined to comment.
Rio, which wants access to Riversdale's coking coal deposits in Mozambique, increased its offer to A$16 (US$16.07) per share in cash yesterday from an earlier indicative bid of A$15.
Resuming trade after a two-day suspension, Riversdale's shares closed 1.7 percent firmer at A$16.57, indicating investors were expecting a higher offer.
"I think there is a strong potential (for rival bids)," said Andrew Harrington, an analyst at Paterson Securities in Sydney.
"There aren't that many big new coking coal assets out there and this one is very large and it's near to production," he said.
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