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- Rio Tinto PLC on Tuesday said it has entered a binding agreement to take full ownership of Mongolian miner owner Turquoise Hill Resources Ltd.
‘The independent directors of Turquoise Hill have unanimously recommended that Turquoise Hill minority shareholders vote in favour of the transaction and, together with senior officers of Turquoise Hill, have entered into voting support agreements with respect to all of the Turquoise Hill shares they own or control,’ it noted.
Turquoise Hill owns 66% of the massive Oyu Tolgoi copper-gold mine, with the Mongolian government holding the remaining 34%. Rio currently holds a 51% stake in Turquoise Hill.
Last week, Rio Tinto said it reached agreement with Turquoise Hill on an improved C$43-per-share, around $32.79, takeover offer. The agreement values the minority share capital in Turquoise Hill at $3.3 billion.
The latest offer improved further on Rio's approach the week before at C$40 after Turquoise Hill in August said it was no longer considering a C$34-per-share bid.
The current offer represents a premium of 67% to Turquoise Hill's closing price of C$25.68 on March 11.
‘Rio Tinto's offer guarantees Turquoise Hill's minority shareholders outstanding value through a significant all-cash premium for their shares. After extensive negotiations, the terms of the transaction are final and there will be no further price increase,’ said Rio Chief Executive Jakob Stausholm.
Rio said it has agreed to provide Turquoise Hill with secured short-term liquidity during the transaction period of up to $1.1 billion, which would need to be repaid if the acquisition is not approved by shareholders.
The deal needs the approval of just under 67% of Turquoise Hill shareholders. Excluding Rio's shares, the takeover also needs a simple majority of votes cast in favour by the minority shareholders.
A meeting to approve the transaction is expected to take place in the fourth quarter of this year, and the deal should close shortly after if shareholders give it the green light.
Shares in Rio Tinto were down 0.2% at 4,724.00 pence in London on early Tuesday. Turquoise Hill shares closed on Friday at C$40.34; the New York and Toronto markets were shut on Monday for holidays.
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