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Rio Tinto PLC on Thursday said it has reached a new agreement to take full ownership of Turquoise Hill Resources Ltd at an improved price of C$43, around $32.64, per share.
The agreement values the minority share capital in Turquoise Hill at $3.3 billion, up from Rio's offer last week that valued the capital at $3.1 billion, or at C$40 per share.
The two firms said on Thursday they have reached an agreement in principle, which requires approval from 67% of voting Turquoise shareholders. Rio owns 51% of the shares in Turquoise Hill, being the majority shareholder.
Further, the deal needs a simple majority of votes cast in favour by the minority shareholders of Montreal-based Turquoise Hill.
Turquoise Hill is the owner of the massive Oyu Tolgoi copper-gold project in Mongolia.
If the deal is successful, London-based miner Rio Tinto will have increased its stake in the Oyu Tolgoi project to 66%, with the government of Mongolia holding the remaining 34%.
‘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. This agreement represents another significant step following the recent commencement of the underground operations, and will simplify governance, improve efficiency and create greater certainty of funding for the long-term success of the Oyu Tolgoi project,’ Rio Tinto Chief Executive Officer Jakob Stausholm said.
In August, Turquoise Hill said it was no longer considering Rio Tinto's takeover offer of C$34 per share, flagging that conditions in both equity and copper markets had ‘changed significantly’ since the March offer.
‘The transaction is the result of extensive negotiations between the special committee of independent directors of Turquoise Hill and Rio Tinto that took place following the receipt on August 24, 2022, of an improved non-binding proposal from Rio Tinto of C$40 per share. These discussions ultimately culminated in the C$43 per share consideration offered pursuant to the transaction, which has the unanimous support of the special committee,’ Turquoise Hill explained.
This further increased offer represents a premium of 67% to Turquoise Hill's closing price of C$25.68 on March 11. The stock closed at C$36.12 in Toronto on Wednesday, giving the entire company a C$7.27 billion, or roughly $5.52 billion, market capitalisation.
Rio Tinto shares fell 2.3% to 4,660 pence each in London on Thursday morning.
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