August26, 2011
Aug. 26 (Bloomberg) -- Rio Tinto Group, the world's second- biggest mining company, and Mitsubishi Corp. raised their offer for the rest of the shares of Coal & Allied Industries Ltd. by 2.5 percent to take the company private.
Coal & Allied accepted the offer of A$1.53 billion ($1.6 billion), or A$125 a share, 6.1 percent more than its close yesterday, the Brisbane-based-company said today in a statement. Rio and Mitsubishi, which own stakes of 75.7 percent and 10.2 percent respectively in Coal & Allied, made an initial offer of A$122 a share on Aug. 8.
"This indicates that they weren't going to get the level of acceptances that they were looking for," Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone. "Once they get to 90 percent within one entity they can compulsorily acquire the remaining 10 percent and effectively they can take it private."
Buying Coal & Allied gives London-based Rio and Tokyo-based Mitsubishi full control of three coal mines in the Hunter Valley in Australia's New South Wales state as prices surge. The move comes as global mining companies take advantage of a four-week market equity rout that wiped about $8 trillion off the value of global equities.
Coal & Allied shares gained 3.6 percent to A$122.02 at the 4:10 p.m. close of the Australian stock exchange in Sydney. The revised offer, made after Coal & Allied dropped 30 percent from its peak this year, values the company at A$10.8 billion.
Power Houses
"The offer is obviously well within the investment matrix for these two powerhouses," said McCarthy. "They both have far greater financial resources."
Rio generated $18 billion in cash from its operations in the year to Dec. 31, compared with a cash flow of $9.6 billion a year earlier, according to data compiled by Bloomberg. Rio has worked to repair its balance sheet, with the help of surging commodity prices as well as more than $11 billion in asset sales, after debt ballooned 19-fold with the purchase of aluminum producer Alcan Inc. in 2007.
Rio, which paid A$3.4 billion to acquire Riversdale Mining Ltd. this year, raised its bid two days after Glencore International Plc offered A$270 million for the shares in Australian nickel producer Minara Resources Ltd. it doesn't already own.
"The revised proposal has been unanimously recommended by the proposal response committee members subject to the independent expert concluding that the scheme is in the best interests of Coal & Allied's minority shareholders and there being no superior proposal," Coal & Allied said in the statement.
Perpetual Ltd., Coal & Allied's third-largest shareholder, has supported the bid in the absence of a higher offer.
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Aug. 26 (Bloomberg) -- Rio Tinto Group, the world's second- biggest mining company, and Mitsubishi Corp. raised their offer for the rest of the shares of Coal & Allied Industries Ltd. by 2.5 percent to take the company private.
Coal & Allied accepted the offer of A$1.53 billion ($1.6 billion), or A$125 a share, 6.1 percent more than its close yesterday, the Brisbane-based-company said today in a statement. Rio and Mitsubishi, which own stakes of 75.7 percent and 10.2 percent respectively in Coal & Allied, made an initial offer of A$122 a share on Aug. 8.
"This indicates that they weren't going to get the level of acceptances that they were looking for," Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone. "Once they get to 90 percent within one entity they can compulsorily acquire the remaining 10 percent and effectively they can take it private."
Buying Coal & Allied gives London-based Rio and Tokyo-based Mitsubishi full control of three coal mines in the Hunter Valley in Australia's New South Wales state as prices surge. The move comes as global mining companies take advantage of a four-week market equity rout that wiped about $8 trillion off the value of global equities.
Coal & Allied shares gained 3.6 percent to A$122.02 at the 4:10 p.m. close of the Australian stock exchange in Sydney. The revised offer, made after Coal & Allied dropped 30 percent from its peak this year, values the company at A$10.8 billion.
Power Houses
"The offer is obviously well within the investment matrix for these two powerhouses," said McCarthy. "They both have far greater financial resources."
Rio generated $18 billion in cash from its operations in the year to Dec. 31, compared with a cash flow of $9.6 billion a year earlier, according to data compiled by Bloomberg. Rio has worked to repair its balance sheet, with the help of surging commodity prices as well as more than $11 billion in asset sales, after debt ballooned 19-fold with the purchase of aluminum producer Alcan Inc. in 2007.
Rio, which paid A$3.4 billion to acquire Riversdale Mining Ltd. this year, raised its bid two days after Glencore International Plc offered A$270 million for the shares in Australian nickel producer Minara Resources Ltd. it doesn't already own.
"The revised proposal has been unanimously recommended by the proposal response committee members subject to the independent expert concluding that the scheme is in the best interests of Coal & Allied's minority shareholders and there being no superior proposal," Coal & Allied said in the statement.
Perpetual Ltd., Coal & Allied's third-largest shareholder, has supported the bid in the absence of a higher offer.
sourced sfgate
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