SYDNEY (MarketWatch) RIVERSDALE Management sign pre-bid argeements See Paragraph 4 Anglo-Australian mining giant Rio Tinto Ltd. Thursday said that it will pay 3.9 billion Australian dollars ($3.9 billion) to buy smaller rival Riversdale Mining Ltd.
The Riversdale board has agreed to accept the A$16-per-share bid, although Rio Tinto /quotes/comstock/22x!e:rio (AU:RIO 87.20, +0.42, +0.48%) /quotes/comstock/13*!rio/quotes/nls/rio (RIO 70.97, +0.25, +0.35%) needs to acquire 50% of Riversdales /quotes/comstock/22x!e:riv (AU:RIV 16.57, +0.27, +1.66%) /quotes/comstock/11i!rflmf (RFLMF 16.70, +0.20, +1.21%) shares for the takeover to go through.
Rio Tinto said that it has already assembled call options on 14.9% of the targets outstanding shares.
Shareholders who have signed pre-bid agreements include Riversdale Chairman Michael OKeeffe, Managing Director Steve Mallyon and Chief Financial Officer Niall Lenahan.
Together they own around 1.3% of the shares subject to pre-bid arrangements.
The rest of the shares subject to the pre-bid arrangement are owned by institutional shareholders, Riversdale said without disclosing the identity of the shareholders.
Some of Riversdales trade shareholders include Indias Tata Steel Ltd. /quotes/comstock/11i!tatly (TATLY 0.00, 0.00, 0.00%) with a 24.2%-stake, and Brazils Companhia Siderurgica Nacional /quotes/comstock/13*!sid/quotes/nls/sid (SID 16.18, -0.04, -0.25%) , with a 13.2% interest in the company.
San Francisco based investment firm Passport Capital LLC owns 13.3% of the firm, while fund management firm LinQ Management Pty. Ltd., is another notable shareholder with almost 2% of Riversdales share capital.
The acquisition is expected to provide Rio Tinto with a substantial coking-coal development pipeline in the emerging Moatize Basin in Mozambique.
Such a deal would be in line with its strategy of developing large, long-life, low-operating-cost assets to grow shareholder value, the mining giant said.
Our significant financial capacity means that we are well placed to take Riversdales asset base through its next phase of development. We believe Rio Tinto is one of the few groups in the world with the capabilities, values and incentives to develop the projects quickly and to a world-class standard, said Doug Ritchie, chief executive of Rio Tintos energy division.
The offer price outlined Thursday is an improvement from a price discussed Dec. 5, when Riversdale said that it had held talks with Rio Tinto over a bid at A$15 a share.
At that time, Riversdale said that Rio Tinto had advised that it was not in a position to submit a proposal, although the firms continued to talk about an offer.
Riversdale shares jumped past the bid price, rising 2.2% to A$16.65 midday Thursday, after being on a trading halt since Tuesday. Rio Tinto shares were up 0.4%.
RIV Price at posting:
$16.57 Sentiment: ST Buy Disclosure: Held
