Rio Tinto has increased its offer for Riversdale Mining by 3% in a bid to break the shareholder standoff that has ensued after it made its first bid. The offer period has also been extended until April 1, 2011, the third time that it has been extended.
Riversdale Mining is unlikely to receive a higher bid from Rio Tinto unless it gets a competing bid from another company. Steve Mallyon the Managing Director of Riversdale Mining has backed the bid from Rio Tinto saying that in the absence of a superior proposal we continue to recommend the Rio offer.
The new offer will see share prices go up from $16 to $16.50 per share if Rio gains more than 50% interest in the company by March 23. It will need support from Major share holders in Riversdale Mining to reach that stake. The two best sources would be Tata Steel and the Brazilian CSN. They currently hold a combined stake worth 47% in the company as opposed to Rio’s current 17% stake.
There has been no indication of rival offers for Riversdale Mining since the last three months in which Rio Tinto made the offer. Managing Director of Riversdale Mining feels that they will compress the development time of the project in Mozambique and deliver faster with less stress. There is no question that Rio Tinto's expertise is crucial to overcoming the development challenges of Riversdale's projects added Steve Mallyon.