Rio Tinto picks Yancoal again

RIO TINTO has snubbed a second Glencore bid for its Australian coal assets, choosing Chinese miner Yancoal following a fast-moving bidding war.

Last week, the Rio Tinto board recommended shareholders approve a US$2.45bn bid from Yancoal made in January for its Coal & Allied mining assets in the Hunter Valley region of New South Wales. This, despite a higher offer of US$2.55bn tabled by Glencore on 9 June. Rio Tinto argued that its Australian rival’s deal would take longer to complete, included staggered payments and had greater regulatory concerns. The approvals for the Yancoal deal have all been received or waived, whereas Glencore needs clearance in Australia, China, Korea or Taiwan.

On Friday, Glencore revised its offer to US$2.675bn offering to pay the full amount upfront as well as a further US$225m if it failed to receive regulatory approvals. Yancoal came back on Sunday countering with a higher offer of US$2.69bn.

Rio Tinto issued a statement today recommending that shareholders vote in favour of the Yancoal because the deal is for more money, has greater regulatory certainty and is expected to be completed in Q3 2017 rather than the first half of next year with Glencore.

Rio Tinto CEO Jean-Sébastien Jacques said: “The revised offer from Yancoal of US$2.69bn offers compelling value to our shareholders for our Australian thermal coal assets. This sale process has been in progress for a long period of time and we believe it is in the best interests of our shareholders to take the greater certainty of Yancoal’s strong proposal.”

Rio Tinto shareholder meetings are arranged for 27 and 29 June to vote on the deal.