JOHANNESBURG (miningweekly.com) – In light of reports on Tuesday that diversified miner Rio Tinto urged its shareholders to vote in favour of the sale of its wholly-owned subsidiary Coal & Allied Industries (C&A) to Yancoal Australia, as opposed to electing the counter offer from Glencore, the latter has raised its offer to $2.67-billion, including a coal price-linked royalty.
Earlier this month, Glencore offered to acquire the C&A assets for $2.55-billion, comprising an initial $2.05-billion in cash and $500-million in deferred cash payments payable as annual instalments of $100-million over five years. The offer also included the coal price-linked royalty.
However, having considered factors in both proposals, Rio Tinto has revealed it is leaning towards the Yancoal proposal, owing to its agreement to accelerate all deferred payments and make a single payment of $2.45-billion, plus a coal price-linked royalty, to buy the C&A assets.
Glencore on Friday said its offer was at least $225-million greater than Yancoal's offer and that the deferred payments would also fall away.
Its offer still remained conditional on approval from China, Korea, Taiwan and Australia. Japanese regulatory approval to acquire C&A has already been obtained.
“Demonstrating our confidence in securing all approvals, our offer is supported by a $225-million deposit which will be forfeited if the transaction does not complete as a result of a failure to obtain a regulatory approval,” the miner said in a statement.
If successful, Glencore intends to mitigate its overall financial commitment through a sale or monetisation of assets of no less than $1.5-billion, including exploring the option of selling down up to 50% of its interest in the C&A mines.