Rio in £940m joint bid for Coal & Allied

MINING group Rio Tinto yesterday flexed its muscles with a joint takeover bid for Coal & Allied Industries.

The bid with Mitsubishi has been pitched at A$1.49bn (£940.4m).

Rio Tinto already holds a 75.7 per cent stake in Coal & Allied, while Mitsubishi owns 10.2 per cent. A successful takeover would be carved up 80 per cent and 20 per cent respectively.

The bid values the Australian miner at A$10.6bn.

The offer would give the London-based mining group full control of three coal mines in New South Wales and comes after months of soaring coal prices.

Rio Tinto and Mitsubishi made an initial offer of A$122 a share, 35.4 per cent more than Coal & Allied’s closing price of A$91 on 5 August, the company said.

Coal & Allied said it had not had enough time to digest the full details of the offer and had yet to decide whether to convene a meeting of shareholders.

The offer, while at a premium, is well below Coal & Allied’s high of A$135 a share in January.

“It makes sense, whether or not they believe there’s value in there. They own three-quarters of the company, so they’re just bringing the rest of it in-house,” said Ric Ronge, a portfolio manager at Pengana Capital, which owns Rio Tinto shares.

Takeovers in the coal sector totalled $11bn in the second quarter as prices trade near ten-year highs with an average premium of 39 per cent, according to data compiled by Bloomberg.