Rio Tinto bids A$3.9bn for Riversdale

Rio Tinto Group Ltd. offered A$3.9bn (US$3.9bn) for rival coking coal developer Riversdale Mining Ltd. to gain excess to crucial reserves in Africa. But, there could be rival bids from other companies as miners seek to cash in on the growing demand for crucial steel-making ingredients. The Rio Tinto bid needs the backing of at least one of Riversdale's three large shareholders, including India's Tata Steel Ltd. and Brazilian steel group CSN. Rio Tinto raised its offer to A$16 per share cash on Thursday from an earlier indicative bid of A$15. Riversdale's shares rose as markets expected superior bids. Riversdale shares had been suspended from trade for the past couple of sessions.



India's state-run International Coal Ventures Ltd. (ICVL) said it was looking at Riversdale and appointed Citigroup to do due diligence. Other interested parties include Anglo American, ArcelorMittal and Xstrata. ICVL may hire bankers to make an offer and may meet soon with them, Chairman C.S. Verma said. Rio Tinto needs acceptances from 50% of Riversdale shareholders, which would require getting green light from at least one of the three big shareholders that together own about half of the company.

Riversdale's executive chairman and founder Michael O'Keeffe and Mallyon have offered their shares into the pre-bid agreement. US-based fund Passport Capital had committed an unspecified number of its shares to a pre-bid agreement that could gives Rio Tinto options over 14.9% of Riversdale. Rio Tinto’s offer was recommended by all of Riversdale’s board, barring the Director appointed by Tata Steel. Tata Steel holds a 24.2% stake as well as a 35% interest in Riversdale’s Benga project in Mozambique, where exports are scheduled to start next year. Rio Tinto is being advised by Macquarie Group Ltd. and Riversdale by UBS AG.