Global miner Rio Tinto Plc. (RIO) acquired majority stake in Australia-based Riversdale Mining Limited. The company now has a stake exceeding 50% and expects to increase it as the offer remains open until April 20, 2011.
The company’s three executives: Douglas Ritchie (Energy chief), Matt Coulter (Energy chief development officer) and David Peever (managing director of Rio Tinto Australia) were appointed to Riversdale’s board.
Management stated that the acquisition provides the company with one of the world’s most prospective tier one coking coal developments, which supports Rio Tinto’s strategy of developing large, long-life, low-cost assets to build shareholder value.
With the acquisition of Riversdale, Rio Tinto will acquire its stake in coal mining and exploration projects in Mozambique. These projects include The Benga project, a 65:35 joint venture with Tata Steel Limited and The Zambeze coal project, 100% owned by Riversdale.
The company recently raised the offer price by $0.50 to $16.50, as it has obtained more than 47% stake in Riversdale by April 6, 2011. Consequently, the company will pay the increased amount of $0.50 in the offer price to Riversdale shareholders who had accepted the offer prior to the hike in offer price.
As per the Corporations Act (as modified), the rise in the offer price led to an extension of 14 days in the offer period. Thus, the offer period is now extended to April 20, 2011.
Earlier, the company had declared that the bid was unconditional, implying the abandonment of Riversdale’s majority shareholders’ acceptance condition. The company had also planned to increase the offer price to $16.50, with the acquisition of a minimum 47% stake by April 6, 2011.
In December 2010, Rio Tinto offered to purchase Riversdale’s shares for A$16 per share, bringing the total consideration to A$3.9 billion.
Headquartered in London, United Kingdom, Rio Tinto engages in exploring, mining and processing the earth’s mineral resources. The company faces tough competition from Vale S.A. (VALE), BHP Billiton (BHP) and Anglo American plc.
BHP BILLITN LTD (BHP): Free Stock Analysis Report
RIO TINTO-ADR (RIO): Free Stock Analysis Report
VALE RIO DO-ADR (VALE): Free Stock Analysis Report
Zacks Investment Research
