Even if RIO does a JV deal with Extract involving equity (newly...

Even if RIO does a JV deal with Extract involving equity (newly allocated shares) RIO still has to make a formal takeover offer for Extract under the 20% rule.

The 20 per cent rule means a person cannot normally acquire 20 per cent or more of a company without making a formal takeover bid.

Under the so-called "creep" provisions, a shareholder can raise their stake above 20 per cent by buying up to three per cent of the company every six months.

Furthermore, such a cap raising would dilute KAH's share of EXT to around 30%, about the same as RIO, post JV deal. Thus RIO only has to pay a premium for 21% more EXT shares to acquire EXT, whereas, CGNPC has to acquire 51% at a premium price.

If I were CGNPC I would pounce NOW via a KAH offer! However, EXT holders are likely to get more for their shares via RIO's strategic JV deal and a direct bidding war for EXT shares.