This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the US print edition of The Wall Street Journal (June 27, 2017).
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LONDON -- Glencore PLC suffered another setback Monday in a bidding war for Australian coal mines, after the commodity giant's rival Rio Tinto PLC said it would rather take a sweetened offer from a Chinese company.
Rio Tinto restated its preference for Yancoal Australia Ltd.'s offer after the company improved its bid to $2.69 billion. Rio Tinto had agreed to sell its Australian coal business, Coal & Allied Industries Ltd., to Yancoal in January for $2.45 billion, but Glencore swooped in earlier this month with its own offers, pushing the price up.
The bidding demonstrates renewed appetite for deal-making by Glencore Chief Executive Ivan Glasenberg almost two years after the Switzerland-based commodity giant experienced a downward spiral in share price. Glencore has since cut its debt almost in half after selling assets, eliminating its dividend and issuing new shares.
Mr. Glasenberg has long wanted to buy Rio's coal business because the assets sit near Glencore's Australian coal operations, offering opportunities for synergies. Mr. Glasenberg rose through Glencore as a coal trader, and the company is among the biggest traders of the commodity in the world.,
Glencore has now twice unsuccessfully tried to outbid Yancoal for Rio's Coal & Allied business.
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The Switzerland-based company first bid $2.55 billion earlier this month, after Yancoal revised its offer to make its $2.45 billion payable upfront. Escalating the bidding on Friday, Glencore submitted an all-cash offer of $2.68 billion, saying its bid was fully funded and worth at least $225 million more than Yancoal's.
Yancoal countered with a bid Rio says is worth around $2.69 billion, comprising $2.45 billion in cash payable in full on completion, as well as $240 million via unconditional guaranteed royalty payments of which $200 million will be received before the end of 2018.
Rio Tinto on Monday confirmed its recommendation that shareholders vote in favor of the sale of C&A to Yancoal on the grounds that the sweetened China-backed offer had a strong chance of completing. Rio has highlighted Yancoal's approval from regulators in China, a voracious consumer of coal.
Write to Tapan Panchal at Tapan.Panchal@wsj.com and Razak Musah Baba at Razak.Baba@wsj.com
(END) Dow Jones Newswires
June 27, 2017 02:47 ET (06:47 GMT)