Glencore continues to pursue an acquisition of Rio Tinto’s coal mines, raising its previous offer for the Hunter Valley assets as it attempts to outbid China’s Yancoal.
Rio last week responded to the bidding war by naming Yancoal as the preferred buyer of its coal subsidiary, Coal & Allied, after it boosted the original offer it made in January.
Glencore stepped up the takeover battle on Friday with a new $US2.68 billion ($A3.54 billion) cash offer, a significant improvement on the $US2.55 billion bid it made earlier this month and considerably higher than Yancoal’s $US2.45 billion offer.
The new Glencore offer, which closes today, would also be paid in full once a deal is completed, unlike its previous bid which involved deferred payments.
“We believe the Glencore offer satisfies the criteria for a superior proposal: it delivers substantially greater value to Rio Tinto shareholders and low deal completion risk,” a Glencore statement said.
“Rio Tinto must provide Yancoal with the opportunity to present a counter offer. If any such counter offer is determined by the Rio Tinto board to be equally or no less favourable than the competing proposal, then Rio Tinto must accept the Yancoal counter offer.”
Glencore also owns coal assets in the Hunter Valley region and believes it can realise considerable savings if it joined the two businesses through this acquisition.
After receiving Glencore’s improved offer, Rio said it would “give the new proposal appropriate consideration” and provide an update in advance of its annual general meeting in London tomorrow.
If Rio accepts the Glencore offer, Yancoal has two business days to make a counter offer.
Yancoal’s original bid for Coal & Allied received approval from the Foreign Investment Review Board (FIRB) in April.
Last month Yancoal, which is owned by China’s Yanzhou Coal Mining, also launched a $US710 million tag-along offer for Mitsubishi’s 32.4 per cent stake in the Hunter Valley operations.
Coal & Allied’s assets include majority shares in the Hunter Valley Operations mine, the Mount Thorley mine and the Warkworth mine. The three operations produced 25.9 million tonnes (Mt) of thermal and semi-soft coking coal in 2016, of which 17.1Mt were Rio Tinto’s share.