Major Rio Tinto said it was ‘disappointed’ by the decision of takeover target Turquoise Hill’s Special Committee to reject its C$34 a share cash bid.
The Special Committee this week said that Rio’s bid for the company did not ‘fully and fairly’ reflect the value of its majority interest in the Oyu Tolgoi copper project, in Mongolia, and that Rio’s offer price was ‘well below’ a range of values implied by a value analysis conducted by TD Securities.
Rio, which holds a 51% interest in Turquoise Hill, continued to argue that the proposed transaction would deliver ‘compelling value’ for the remaining shareholders in the company, and would provide the certainty of an all-cash offer at an attractive premium of 32% to Turquoise Hill’s closing price of C$25.68 per share on March 11 and a 78% premium to Turquoise Hill’s closing price of C$19.12 per share on January 24, the day before agreeing a path forward between government of Mongolia, Turquoise Hill and Rio Tinto that enabled commencement of the underground mine at Oyu Tolgoi.
Rio also pointed out that in its latest earning results, Turquoise Hill disclosed that it needs to raise equity proceeds of more than $1-billion to address its current estimate of funding requirements.
“Rio Tinto remains as committed as ever to the long-term success of Oyu Tolgoi. While we are disappointed by this decision, we will continue to work constructively with the board of Turquoise Hill to advance the Oyu Tolgoi project,” said the miner’s CEO for copper, Bold Baatar.
He said that the company would remain financially disciplined as it considers its options.