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New setback in Rio Tinto’s pursuit of Turquoise Hill

Friday, November 18th, 2022

Rio has said it will terminate agreements with dissenting minority Turquoise Hill shareholders, raising further questions about the takeover.

Rio has said it will terminate agreements with dissenting minority Turquoise Hill shareholders, raising further questions about the long-planned takeover.

In an update on the situation, Rio Tinto said it had “carefully considered concerns raised by minority shareholders of Turquoise Hill Resources in relation to the dissent and dispute resolution provisions in the agreements it entered into” with minority shareholders Pentwater Capital Management and SailingStone Capital Partners.

Following those considerations, Rio said it will terminate the agreements with Pentwater Capital Management and SailingStone Capital Partners.

“We have acknowledged feedback received from minority shareholders and returned to the proposal originally unanimously recommended by the Turquoise Hill Special Committee,” Rio Tinto’s Copper chief executive Bold Baatar said.

“We will work with the Turquoise Hill Special Committee to secure a new shareholder meeting date so that the proposed transaction can be voted on by minority shareholders as soon as practicable.

“We continue to believe that a premium of 67 per cent for their shares and removal of financial uncertainty is an attractive proposition for minority shareholders.”

News of the terminated agreements comes days after it was reported the deal had been postponed indefinitely after a Canadian regulator noted public interest concerns.

Rio’s agreements with Pentwater Capital Management and SailingStone Capital Partners, made at the beginning of November, were designed to see the two parties withhold their votes at a special meeting and exercise their dissent rights in respect of the arrangement.

The mining giant’s pursuit of the 49 per cent of Turquoise Hill it doesn’t already own has been a bumpy process.

Rio Tinto made its first move on Turquoise Hill in March at a price of $US2.7 billion ($3.76 billion). When that initial offer was formally terminated in mid-August, Rio later came back with a beefed up offer of $US3.1 billion ($4.48 billion).

The third time seemingly proved the charm and the Turquoise Hill board accepted Rio’s offer of $US3.3 billion ($4.86 billion) bid for the Canadian miner in late-August.

The ultimate goal of the takeover is to gain control of the Oyu Tolgoi project in Mongolia, said to be one of the world’s largest known copper and gold deposits.

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