Rio Tinto backs revised Yancoal bid for Coal & Allied assets

JOHANNESBURG (miningweekly.com) – Diversified miner Rio Tinto on Monday confirmed that China-controlled Yancoal Australia was the preferred buyer for its Australian Coal & Allied unit.

Yancoal at the weekend increased its offer to $2.69-billion, adding $240-million in unconditional guaranteed royalty payments to a previous cash offer of $2.45-billion.

This follows consideration by Rio Tinto’s board of a revised offer from Glencore, which on Friday increased its bid to $2.67-billion.

“The revised offer from Yancoal offers compelling value to our shareholders for our Australian thermal coal assets. This sale process has been in progress for a long period of time and we believe it is in the best interests of our shareholders to take the greater certainty of Yancoal’s strong proposal,” Rio Tinto CEO Jean-Sébastien Jacques said.

He added that the Rio board had considered both offers and was recommending Yancoal's improved offer to its shareholders based on greater transaction certainty and a higher net present value.

The company noted that the Yancoal offer included a greater level of completion certainty, greater net present value and improved downside protection with a break fee of $225-million.

It also said the Yancoal offer included a faster and more certain timetable, with the deal expected to complete during the third quarter of this year, whereas any transaction with Glencore was unlikely to complete until the first half of 2018 at the earliest.