UPDATE: Tata Steel Raises Riversdale Stake Amid Rio Tinto Bid
02 März 2011 - 4:56AM
Dow Jones News
Riversdale Mining Ltd.'s (RIV.AU) largest shareholder has lifted
its stake in the Africa-focused coal company, ensuring it and the
next-largest shareholder have a strong say in Rio Tinto PLC's (RIO)
proposed 3.9 billion Australian dollar ($3.94 billion)
takeover.
The creeping investment by India's Tata Steel Ltd. (500470.BY),
which together with Brazilian steelmaker Cia. Siderurgica Nacional
(SID) now own a 47% voting stake in Riversdale, suggests a slow
take-up for Rio Tinto's offer. The Anglo-Australian mining company
has twice extended the deadline for its bid, last week moving it to
March 18.
People familiar with the offer said it is likely Tata and CSN
are ensuring they play a key role in the takeover discussions and
may even be pushing for an improvement on the A$16 a share offered
by Rio Tinto.
In a letter to Riversdale, released to the Australian securities
exchange Wednesday, Tata said it had raised its stake in the
company 2.9 percentage points to 27.1%. CSN has also raised its
stake, in February taking it to 19.9%. Rio Tinto Tuesday said its
interest in Riversdale and acceptances for its offer had risen to
16.9% from 15.9% in mid-February.
Rio Tinto has said its bid is subject to it securing more than
50% of Riversdale's shares. Riversdale has said its directors have
all recommended Rio Tinto's offer "in the absence of a superior
proposal," although N.K. Misra had given his okay for the tie-up
only as a nominee director of Riversdale and not as head of mergers
and acquisitions at Tata.
Tata last week said it hadn't made a decision on its stake in
Riversdale, and a spokesman Wednesday declined to comment other
than to say the holding was considered strategic by the steel
company. A spokesman for Riversdale declined to comment, and
spokesmen for Rio Tinto in Melbourne weren't immediately available
when contacted.
The interest shown in Riversdale, which has a coal mine in South
Africa and is developing two major coal projects in neighboring
Mozambique, highlights global appetite for the fuel. Tata has a 35%
stake in Riversdale's Benga project, ensuring coal supplies for its
steel operations, and Wuhan Iron & Steel Co. (600005.SH) last
year agreed to buy a 40% interest in its Zambeze project for a
similar percentage of coking coal produced.
Tata and CSN are now forbidden by Australian listing rules from
raising their stakes further for six months without launching a
formal offer. At 0305 GMT, Riversdale's shares were trading 3.2%
lower at A$15.00, outpacing a decline in the wider market.
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094;
robb.stewart@dowjones.com
--David Fickling in Sydney contributed to this article.
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