Rio sweetens the deal for Turquoise Hill
PERTH (miningweekly.com) – Mining major Rio Tinto has increased its takeover offer for TSX- and NYSE-listed Turquoise Hill from C$34 a share to C$40 a share to acquire the remaining 49% interest in the company it does not already own.
Rio said on Thursday that the increased offer provided an 18% premium to the company’s last takeover offer, and a 56% premium to Turquoise Hill’s last closing price on the TSX prior to the initial proposal.
“Rio Tinto believes this offer not only provides full and fair value for Turquoise Hill shareholders, but is in the best interests of all stakeholders as we work to move the Oyu Tolgoi project forward,” said CEO Jakob Stausholm.
“We will continue to take a disciplined approach to capital allocation and strongly encourage the board of Turquoise Hill to engage constructively, and to support and recommend in favour of Rio Tinto’s improved proposal.”
Rio pointed out that since its initial proposal was made on March 14, the average share price performance of Turquoise Hill’s peers had declined 35% in light of a deteriorating and more uncertain external environment. Furthermore, Turquoise Hill has disclosed in its latest earnings results that it needs to raise equity proceeds of more than $1-billion to address its current estimate of funding requirements.
The improved offer is subject to the same conditions as Rio’s initial offer, including the full support of the Turquoise Hill Special Committee, shareholder approval, and Turquoise Hill not raising additional equity capital.
On Turquoise Hill’s agreement with the terms of the improved proposal, Rio said that it was prepared to discuss appropriate further amendments to the updated financing arrangements between Turquoise Hill and Rio, and to provide Turquoise Hill with the necessary liquidity to operate through completion of the transaction.
Turquoise Hill on Thursday said that the company’s board of directors was currently considering the increased offer.
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