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Rio Tinto to Buy Balance of Turquoise Hill for $3.3 Billion

Today's Top Mover TRQ +3.67 +13.34%
https://finviz.com/quote.ashx?t=TRQ

James Fernyhough
Thu, September 1, 2022 at 6:44 AM·2 min read
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(Bloomberg) -- Rio Tinto Group agreed to buy out Turquoise Hill Resources Ltd. in a deal valued at about $3.3 billion, securing more control of a giant copper mine in Mongolia.

The C$43-a-share deal comes two weeks after Montreal-based Turquoise Hill rebuffed a lower offer from the mining giant and ends almost six months of takeover talks.

Rio, which already owned a 51% stake, has been seeking to add direct exposure to Turquoise Hill’s Oyu Tolgoi asset, which is expected to be the world’s fourth-largest copper mine once an underground expansion is completed.

Rio said the final deal, which is subject to shareholder approval, represented a 67% premium on Turquoise Hill’s share price before Rio’s first offer on March 11.

“It’s a little bit higher than our base-case valuation,” Saul Kavonic, an analyst at Credit Suisse, said of the deal. “But this clears up the joint venture to a clear pathway to development of what can become a core asset for Rio,” he said, adding that buying the stake “was probably necessary in order to move the project forward.”

Should the deal go ahead, Rio would own 66% of the Oyu Tolgoi mine and the Mongolian government would hold the remaining 34%.

The deal requires two thirds of shareholders, including Rio Tinto, to vote in support. On top of that, more than 50% of minority shareholders must vote in favor. Rio said it hoped a vote would take place “as early as possible in the fourth quarter of 2022.”

“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’s Chief Executive Officer Jakob Stausholm said in a statement.

Shares of Turquoise Hill jumped nearly 15% to C$41.50 at 9:40 a.m. in Toronto, the highest intraday price since May 2018. Rio Tinto fell 3.4% in London, in line with a broader decline in commodities stocks.