Riversdale nod for Rio offer | business | Hindustan Times
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Riversdale nod for Rio offer

business Updated: Dec 23, 2010 21:32 IST

Rio Tinto has offered $3.9 billion to buy Australian-listed coal miner Riversdale in an agreed deal to give the Anglo-Australian mining giant access to African coking coal deposits as demand for the commodity from Asia soars.

Rio raised its offer to A$16 per share cash but Riversdale shares rose as high as A$16.84 when the stock resumed trading, indicating investors were expecting a higher offer from a rival party.

A group of state-run Indian firms has said it is looking at Riversdale, while sources said other interested parties include Anglo American , ArcelorMittal and Xstrata.

"I think there is a strong potential (for rival bids). There aren't that many big new coking coal assets out there and this one is very large and it's near to production," said Andrew Harrington, an analyst at Patersons Securities in Sydney.

The miner needs acceptances from 50% of Riversdale shareholders which would require getting on board at least one of the target's big shareholders — Tata Steel, Brazilian steel group CSN and US fund Passport Capital, which together own about half of the company.

"I think Tata will be reluctant to be bought out, having been a long-term believer, just as it's entering into production," Patersons' Harrington said.