Dec. 22 (Bloomberg) --Rio Tinto Group, the world’s third biggest mining company, offered A$3.9 billion ($3.9 billion) for Australian coking coal developer Riversdale Mining Ltd. to gain reserves in Mozambique as demand rises.
Rio offered A$16 a share for Riversdale, the London-based company said today in a statement. That’s less than the A$16.30 that Riversdale last traded at on Dec. 20. Riversdale, which said today directors recommended the offer, said Dec. 6 it had held talks with Rio on a proposal at A$15 a share.
Buying Riversdale will raise Rio’s reserves of steelmaking coal as demand climbs and mark a return to acquisitions after its purchase of Alcan Inc. in 2007 saddled it with almost $40 billion of debt before the global financial crisis. Coal deals in 2010 have more than doubled to $36 billion after imports by China, the biggest consumer, surged fivefold in 2009.
"The acquisition of Riversdale is in line with our growth strategy of investing in, developing and operating large, long term, cost-competitive mines and businesses,” Doug Ritchie, chief executive of Rio’s energy unit, said in the statement.
The offer is a 46 percent premium to Riversdale’s one-month volume weighted average price, Rio said in the statement.
A successful bid for control of Riversdale would require the support of at least one of its major shareholders, with the top-three investors owning about 51 percent of the company. India’s Tata Steel Ltd. is the largest holder with a 24.2 percent stake. Tata also owns a 35 percent interest in Riversdale’s Benga project in Mozambique, where exports are scheduled to start next year.
Rio has secured 14.9 percent of Riversdale’s shares in pre- bid agreements with some shareholders including senior executives.
Global demand for coking coal may rise 16 percent to 259 million metric tons in 2010, UBS AG estimated. The market will tighten further in 2011 and 2012 with an estimated deficit of 4 million to 6 million tons driven by demand from China and India, UBS said.