US-based SailingStone, which has a 2.2% stake in Turquoise Hill, said the “opportunistic” cash offer for the 49% of the shares it doesn’t already own is well below Rio’s own valuation of the company.
According to the fund manager specializing in resources companies, Rio’s bid of C$43 a share was C$13 short of the minimum it would accept.
“Rio Tinto holds its interest in Turquoise Hill on the Rio balance sheet at $41 a share, the equivalent of C$56 a share at current exchange rates and a more than a 30% premium to the revised offer,” Sailingstone said in a statement. “This should be the bare minimum for any attempt at price discovery.”
Under the provisional agreement, two thirds of the remaining shareholders, including Rio Tinto, need to vote in favour of the deal. Additionally, more than 50% of minority shareholders must accept it.
Rio’s offer already has the unanimous support of Turquoise Hill’s special committee of independent directors, the companies said on Thursday.
If approved, the move would give the global miner a 66% stake in the giant Oyu Tolgoi mine in Mongolia, one of the world’s largest known copper and gold deposits. The remaining 34% is owned by the Mongolian government.
Rio Tinto has had a rocky relationship with the Quebec-based miner, particularly over how to fund Oyu Tolgoi’s expansion. Rio has also drawn criticism from some of Turquoise Hill’s minority shareholders about the control it exerts over the company.
The global miner, which has mined copper from Oyu Tolgoi’s open pit for a decade, and the Mongolian government ended earlier this year a long-running dispute over the $7 billion expansion of the mine.
Rio Tinto chief executive Jakob Stausholm has said the proposed takeover would simplify governance, improve efficiency and create greater certainty of funding for the long-term success of the Oyu Tolgoi project.
