Rio Tinto Agrees To $3.3 Billion Deal For Rest Of Turquoise Hill
Rio Tinto on Thursday reached an in-principle agreement to buy the rest of Canadian firm Turquoise Hill Resources for $3.3 billion, which gives the global miner direct ownership of a giant copper mine in Mongolia.
Rio will pay C$43 per share in cash for the 49% of Turquoise Hill it does not already own, a more than 19% premium to the stock's last close and higher than a sweetened offer of C$40 apiece proposed last month.
The deal, which awaits shareholder approval, gives the global miner ownership of Turquoise Hill's 66% stake in Oyu Tolgoi, the world's largest known copper and gold deposits, 550 km (342 miles) south of Mongolia's capital Ulaanbaatar.
Global mining firms are looking for growth in commodities such as copper - used in wind turbines, solar power systems and electric cables - and nickel and lithium that are used in batteries for electric vehicles (EVs), as the world gears up to decarbonise.
The takeover process has been ongoing for about six months with Turquoise Hill earlier rejecting the C$34 apiece offer from Rio, citing it was too low.
"Rio Tinto is committed to moving Oyu Tolgoi forward in direct partnership with the government of Mongolia to realise its full potential for all stakeholders," Rio Tinto Chief Executive Officer Jakob Stausholm said.
"This agreement ... will simplify governance, improve efficiency and create greater certainty of funding for the long-term success of the Oyu Tolgoi project."
Rio and the Mongolian government, which owns the remaining 34% of Oyu Tolgoi, ended a long-running dispute over the $7-billion expansion of the mine earlier this year.
Rio rival BHP Group was rebuffed in its A$8.34 billion ($5.8 billion) takeover bid for OZ Minerals last month, as it looks to shift into clean energy and the EVs market.
BHP has not said if it would sweeten its offer, although analysts and bankers believe it would have to if it wants to secure the asset.
Rio and Turquoise Hill also agreed on Thursday to amend certain financing arrangements to help the Canadian firm address near-term liquidity, the global miner said.
The agreements include increasing an early advance facility agreed in May to $650 million from $400 million and extending the deadline for a $650 million equity raising and debt repayment to at least March 2023.
The amended arrangements also include a commitment by Rio to participate pro rata in an initial equity offering.
A special meeting of Turquoise Hill shareholders to approve the deal is expected in the fourth quarter, and the deal will close shortly thereafter, if approved, Rio said.
($1 = 1.4669 Australian dollars)
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