23/12/2010 - 09:39

Rio bids $3.9bn for Riversdale

23/12/2010 - 09:39

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Mining giant Rio Tinto has secured the backing of a majority of Riversdale Mining's directors for a takeover offer that values the Africa-focused coal miner at $3.9 billion.

Rio bids $3.9bn for Riversdale

Mining giant Rio Tinto has secured the backing of a majority of Riversdale Mining's directors for a takeover offer that values the Africa-focused coal miner at $3.9 billion.

With speculation other companies, including Swiss mining giant Xstrata may be readying to make a bid, Rio Tinto offered $16 per share for Riversdale.

If Rio Tinto is successful in its takeover bid for Riversdale, it would mark the mining giant's first major acquisition since its ill-timed $US38.1 billion takeover of Alcan in 2007 at the height of the commodities boom.

Riversdale told shareholders its board had carefully considered the offer and most directors had recommended the move, with one director abstaining from voting.

"All recommending directors and Niall Lenahan, the chief financial officer of Riversdale, intend to accept the Offer in respect of their own shareholdings, in the absence of a superior proposal," Riversdale said.

The recommending directors are Executive Chairman Michael O'Keeffe, Managing Director Steve
Mallyon and non-executive directors Andrew Love, Gary Lawler and Tony Redman.

Rio Tinto has secured pre-bid agreements from the recommending directors, along with chief financial officer Niall Lenahan and various institutions, in relation to 14.9 per cent of Riversdale's current shares on issue.

Riversdale is 24 per cent owned by India's Tata Steel, which also has a 35 per cent stake in the Benga coal project in Mozambique.

Benga is projected to produce 20 million tonnes per annum of coal by 2013.

Riversdale owns another major project in Mozambique and controls the Zululand Anthracite operation in South Africa.

The offer price represents a 46 per cent premium to the one-month volume weighted average price (VWAP) of Riversdale shares to November 3. That was the last trading day before speculation of a takeover offer emerged.

Riversdale shares last traded at $16.30 per share.

Rio said the acquisition would provide it with a substantial tier one coking coal development in the emerging Moatize Basin in Mozambique.

Chief executive of Rio Tinto's energy division, Doug Ritchie said the acquisition was in line with the group's strategy of investing in large, long term, cost-competitive mines.

"Rio Tinto's extensive experience in infrastructure and large project development combined with our significant financial capacity means that we are well placed to take Riversdale's asset base through its next phase of development," Mr Ritchie said.

"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," he said.

Mr Ritchie said the takeover underlined his company's commitment to Africa.

Investors had largely been expecting Rio to come back with a $16 bid to better earlier talks of a $15 bid that were confirmed this month.

It is expected Riversdale will send its shareholders the bidder's statement and target's statement in January next year.

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