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Posts Tagged ‘CSN’

Rio Tinto Assumes Control of Riversdale

April 12, 2011 Comments off

“Rio Tinto said Friday it has assumed control of Riversdale Mining Ltd., as its interest in the Africa-focused coal producer rose above 50%, and could increase further before the takeover offer closes April 20. Riversdale has already appointed three Rio Tinto nominees to its board, including energy division Chief Executive Doug Ritchie, and Rio Tinto said other appointments are expected to follow.

‘The new Riversdale board will reflect our majority shareholding and help clear the way for the development of Riversdale’s assets as quickly as possible,’ Mr. Ritchie said in a statement.”

Source: Wall Street Journal, April 8 2011

Observations:

  • Rio Tinto managed to secure control of Riversdale in about 4 months time, the first approaches made in December. For some time an Indian state-backed coal consortium was looking at making a bid, but no competing bids were ever made.
  • The offer deadline at A$16.50 per share is extended to April 20th. Any shareholder that did not yet commit shares can decide to sell at this price up to next Wednesday. As a result Rio Tinto will end up with slightly more than 50% of the shares.

Implications:

  • The resulting shareholder structure is not unfavorable to Rio Tinto. It has full control over the assets, but at the same time can count on support from Tata for supply agreements. In the current configuration only CSN might not be very satisfied with the change of control. Time will teach whether or not CSN management will try to sell the stake.
  • In earlier stages Rio Tinto was reported to want to replace Riversdale’s management. Most likely the appointment of several directors is used as a means to get full understanding of the company, after which management changes will be made.

©2011 | Wilfred Visser | thebusinessofmining.com

Rio Tinto still not in control of Riversdale

March 29, 2011 Comments off

“Rio Tinto PLC failed to reach the majority stake it was chasing in Riversdale Mining Ltd., but said Tuesday the takeover offer remains open and it will accept a position as the largest shareholder accepting that may mean it won’t be able to push through its plans for the Africa-focused coal company.

The bid, which values all of Riversdale at almost US$4 billion, was declared unconditional and the offer price set at AU$16.50 a share provided Rio secures a more than 47% interest in Sydney-based Riversdale by April 6. Rio’s effective interest had risen to 41.04%, short of the more than 50% threshold previously set for the offer by a Monday deadline.”

Source: Wall Street Journal, March 29 2011

Observations:

  • Where the company previously aimed for 50.1% of the shares, it is now said to be satisfied with 47%, which would give it a larger share than the other two major shareholders (Tata Steel and CSN) combined.
  • The new offer is made unconditional in order to enable various institutional investors that were not allowed to sell under conditions.

Implications:

  • Rio Tinto will not be able to pursue the same strategy to gain control it used for the Oyu Tolgoi deposit, where it slowly grew its ownership stake in project owner Ivanhoe Mines. CSN and Tata Steel are both to large and not complementary for Rio Tinto to try to control them.
  • It is still very likely that either Tata Steel or CSN will sell at least part of their shares in exchange for long term supply commitments by Rio Tinto. Both companies have build up their stakes in the past months to gain a better negotiation position.

©2011 | Wilfred Visser | thebusinessofmining.com