Rio may lift Riversdale bid as investors up the ante Sarah-Jane Tasker From: The Australian March 04, 2011
RIO Tinto is likely to amend its $US3.9 billion ($3.8bn) bid for Mozambique-focused Riversdale Mining after the target's major shareholders increased their stake -- and their power to block the deal. Indian steel giant Tata Steel lifted its stake in the coal hopeful to 27 per cent this week.
Brazil's CSN has a 19.9 per cent stake, which means the major investors can thwart Rio's $16-a-share bid, which has been backed by the Riversdale board.
Rio has said it will settle for a controlling stake in Riversdale, and with both major shareholders raising their stakes at or below the $16-a-share offer, speculators are tipping a small rise in the bid.
Pengana Capital fund manager Tim Schroeders said there was still enough scope to suggest the deal would go ahead in "some shape or form".
"What that ultimately is and what Rio has to forgo to get to a position to move forward on this, is very subjective at this stage," he said.
. "But Rio brings expertise to the table, which arguably the other parties aren't, and it is a very big project and highly capital-intensive, so you would want someone who is experienced in those types of projects to be able to execute."
With the rising price of coal and supply concerns, the steel giants are keen to secure an interest at the project level, and are unlikely to be chasing a profit on their interests.
Mr Schroeders said the talks between the parties would not focus on the pricing mechanism, but on how the associated interests could work together to bring the project into production.
"It is just a question of finding a middle ground where everyone is happy," he said.
RIV Price at posting:
$15.08 Sentiment: Buy Disclosure: Held
