Rio Tinto raises Riversdale bid to break stalemate

Reuters

MELBOURNE (Reuters) - Global miner Rio Tinto <RIO.AX> <RIO.L> raised its offer for Mozambique-focused coal miner Riversdale Mining <RIV.AX> to $3.9 billion to woo key shareholders who have held up the deal and gain control of coveted metallurgical coal assets.

Rio Tinto raised its offer price to A$16.50 per share on Thursday from A$16.00 and extended the offer period for the third time, to April 1, but said the new offer was its final one if there were no competing offers.

Continue Reading Below

Shares of Australia-listed Riversdale jumped as much as 4 percent in early trade but eased back to trade up 1.8 percent at A$15.4, well below the offer price, indicating shareholders did not anticipate a rival offer and had some doubt Rio could gain the shares for the bid to go through.

Standing in Rio's way are India's Tata Steel <TISC.BO>, the world's No. 7 steelmaker and top Brazilian steel producer CSN <CSNA3.SA>, who have increase their stakes in Riversdale since the bid and now hold a combined 47 percent.

The two big shareholders alone do not have the votes to block Rio, which has built a 17 percent stake, but Rio would need nearly 100 percent acceptances from minority shareholders to override Tata Steel and CSN.

Tata Steel and CSN have both said they are mainly interested in securing coking coal from Riversdale and Tata, which already has a stake in Riversdale's Benga coking coal project in Mozambique, said it was talking to Rio about a range of options.

CSN has not publicly revealed its intention over the Riversdale stake or about its possible talks with Rio Tinto.

However, analysts said the two companies would probably like to see Rio Tinto, with deeper pockets and more technological skills than Riversdale, developing Riversdale's Mozambique mines and infrastructure.

At the same time the steelmakers might want the coal mine to remain out of Rio's hands, because they do not want coking coal supplies to come under as tight a control as iron ore, where supplies are largely controlled by three miners, including Rio.

(Reporting by Sonali Paul and Balazs Koranyi; Editing by Ed Davies)