Rio Tinto makes take-it-or-leave-it offer for Riversdale

As a last-ditch effort to woo investors and shareholders of Riversdale Mining Ltd in which Tata Steel holds the largest stake, Australian mining major Rio Tinto has raised its offer price for the Africa-focused mining company to $16.50 per share from $16 per share.

However, the offer comes with a rider. Rio Tinto will offer $16.50 a share only if it succeeds in acquiring 50% holding in the company by March 23. Or else, the offer price would remain $16 a share.

“There has been no sign of a competing proposal in the 11 weeks since the bid was announced. The choice for Riversdale shareholders is clear — accept the $16 or $16.50 on offer or risk seeing their share price return to pre-bid levels,” said Doug Ritchie, energy chief executive, Rio Tinto.

Before the bid, the share price of Riversdale was at $14.10 per share and closed at $15.13 on the Australian Stock Exchange on March 9.

Currently, Rio Tinto has 17.86% stake in Riversdale and is desperately seeking more from the open market to cross the required figure of 50%.

The company is not keen to sign a deal with Riversdale unless it has a shareholding of 50% or beyond in the coking coal mining company.

In a statement, Rio Tinto said there will be no further increase in offer price beyond $16.50 in the absence of a competing proposal and it frees the bid of all conditions other than the 50% minimum acceptance condition.

Rio Tinto has also extended the offer period by two weeks until April 1, 2011.

While the Riversdale Board has approved the sale of shares to Rio Tinto and recommended the offer to its minority shareholders, the biggest impediment for Rio Tinto is in the form of Tata Steel and Brazilian company CSN.

Together Tata Steel, which is the biggest shareholder of Riversdale with 27.14% stake, and CSN currently hold over 47% in Riversdale and there have been no signs of a sell-off from both the companies.