ref="http://www.cityam.com/company/rio-tinto">RIO TINTO is in talks with Australian-listed coal miner Riversdale about raising its A$3.8bn (£2.5bn) friendly takeover bid, sources close to the companies said yesterday.
Riversdale suspended its shares in accordance with Australian rules yesterday, reporting that it was set to make an announcement “about a possible control transaction”.
The company has requested a trading halt until the markets open on Thursday, meaning a statement on a new offer could appear today.
Rio is understood to be considering an increased bid of A$16 a share, up from the offer of A$15 on the table since the start of the month, though the firms are still discussing the details.
The new price would be a 13.5 per cent premium to Riversdale’s close on 3 December, the company’s last trading price before news of Rio’s interest was announced.
Some reports have also named Tata Steel, which owns a 24 per cent stake in Riversdale, and Anglo American as other potential bidders for the company, though Riversdale has only named Rio so far. Both declined to comment yesterday.
Spokespeople for Rio Tinto and Riversdale also declined to comment.
Investors said Rio Tinto might still turn to rivals to mount a joint venture rather than a full takeover to get a deal past Riversdale’s major shareholders, which also include Brazilian steelmaker CSN and US Investment firm Passport Capital.
“Rio are really long on thermal coal but short on coking coal so this would propel them into the big league over time into coking coal,” said Constellation Capital Management analyst Peter Chilton. “I think it could be some kind of joint venture or arrangement like that rather than an out-right purchase.”
Shares in Rio Tinto closed 2.5 per cent up at £45.32 yesterday, in line with a broader increase in mining stocks in the FTSE 100.
MACQUARIE Bank’s resources team in Australia is advising Rio Tinto on its efforts to take over Riversdale.
The Antipodean bank, which has offices in the City, has long acted as adviser for the mining giant. It coordinated and underwrote its $15.2bn (£9.8bn) rights issue in 2009 and worked at Rio’s side during BHP Billiton’s $189bn merger offer in 2008.
This year, the resources team has worked as joint sponsor for Canadian energy firm SouthGobi during its C$463m (£294.3m) global offering and secondary listing in Hong Kong. Several other firms including Real Gold and UC Rusal have used Macquarie to help them raise funds from the Hong Kong market.
The bank also helped create the world’s fourth-biggest gold miner earlier in the year, when it advised Lihir Gold during its A$24.5bn merger with Newcrest Mining.
Macquarie also managed African Mineral’s £80m private placement earlier this year.
The bank has also worked with Lloyds Banking Group, QBE and the Agricultural Bank of China during fund raisings – the latter, at A$19.2bn (£12.4bn), breaking the record for the world’s largest IPO.
UBS is advising Riversdale.