Home » Posts tagged 'history'
Tag Archives: history
Rio Tinto and Riversdale
Mining giant Rio Tinto has lowered its minimum acceptances target slightly in a last ditch effort to takeover South Africa’s Riversdale Mining. Rio’s offer of 16.50 Australian dollars ($16.42; £10.14) is now conditional on 47% of shareholders accepting it by 6 April. Previously its minimum target was 50%. The move came after talks on the A$3.9bn offer between Rio and Riversdale major shareholder, Brazil’s CSN. UBS advised Riversdale and Macquarie advised Rio Tinto.
Share acquisition
After failing to talk 20 per cent Riversdale shareholder CSN into selling enough shares to give Rio a controlling stake, Rio went unconditional on its bid late on Tuesday and cut from 50.1 per cent to 47 per cent the threshold it needs to reach to lift its offer from $16 a share to $16.50. The bid, which values all of Riversdale at almost US$4 billion, was therefore declared unconditional and the offer price set at 16.50 Australian dollars (US$16.9) a share provided Rio secures a more than 47% interest in Sydney-based Riversdale by April 6. Rio’s effective interest had risen to 41.04%, short of the more than 50% threshold previously set for the offer by a late Monday deadline.
History of the bid
Support for the bid has slowly gained traction in recent weeks but was always going to be a close call without either CSN or Tata selling some or all their shares to Rio. CSN in February edged up its stake in Riversdale and then Tata Steel early this month raised its stake 2.9 percentage points to 27.1%.
Analysts have speculated that CSN and Tata increased their stakes to ensure they can negotiate for supplies of coking coal, a key raw material in steel making. The two clashed in fact in early 2007 with the takeover of British steelmaker Corus Group PLC, bidding that was only settled by a nine-round sudden-death auction that pushed the price for winner Tata up by several billion dollars to US$12.2 billion.
Commercial rationale
A successful deal would mark Rio’s first major acquisition since its ill-timed US$38 billion takeover of Canadian aluminum producer Alcan Inc. at the height of the market in 2007 and would give it control of two major developing coking coal projects in an area of Mozambique attracting interest from mining and steel companies around the world. Riversdale’s two largest shareholders, steel producers steel producer Cia. Siderurgica Nacional of Brazil and Tata Steel Ltd. of India, together hold a deciding 47% stake but have remained quiet since the offer was first made in December.
Rio had been negotiating to buy Riversdale shares from CSN after failing to gain majority control by its deadline. According to Rio, the company’s experience developing large projects and its financial capacity are important in taking Riversdale’s assets “to the next stage of development.”
Riversdale operates a colliery in South Africa and is developing two projects in the Tete province of neighboring Mozambique, an area believed by some companies to be home to a massive deposit of high quality coal that may rival Australia’s Bowen Basin in Queensland. The company’s executives in January said that should Rio’s offer fail, Riversdale would need to turn to its shareholders, the bond market and other sources to raise more than US$3 billion needed to fund the projects.
Long tem plans
Rio in a statement said that if it secures less than a majority position in Riversdale, it won’t alter its plans for the company but may mean its ability to influence Riversdale’s decisions is limited and it may not be able to gain seats on Riversdale’s board as it intends. It previously said it plans to sell Riversdale’s South African coal operation, consolidate its head office with its own and seek the resignation of Riversdale’s directors
The comprehensive spending review, it's simples…
Last week, I asked a London cabbie why he voted Tory. All of them are not voting for Ken Livingstone, but it’s an entirely different matter altogether why some of them don’t trust Labour with the economy.
At the heart of many of such people’s criticisms is the idea is that the state is overinflated, spending on it ballooned out of proportion especially in management, and that we did not invest when we could have afforded it. This ‘we didn’t mend the roof while the sun was shining’ may seem at face value entirely sensible, but I would argue that we should not set fire to the whole house as the roof is not right.
The real issue is that we need to get the deficit down without endangering the recovery, and central to that is not adopting a strategy which the Institute of Fiscal Studies and Confederation of Small Businesses have described as unfair. Norman Lamount said famously that unemployment is a price well-worth-paying, and the Labour current policy recognises that growth and jobs are central to our economic strategy – not a side issue.
It is often said that the general public should not be underestimated, but I wonder how many people genuinely stop to think about this in actuality. All parties need to treat the public as intelligent enough to understand that bringing the world economy back from the brink of catastrophe is not the same as paying off a credit card bill. ?For example, there are only very few companies who have a AAA* rating which are about to go ‘bankrupt’. George Osborne by claiming that Britain is about to go bankrupt is making a legal representation potentially – whether this misrepresentation is fraudulent, negligent or innocent, I’ll leave entirely up to you.
There has to be cuts but without growth, attempts to cut the deficit will be self defeating. ?A rising dole queue means a bigger welfare bill, and less tax revenue coming in. ?Perplexingly whilst the Government introduces a ‘bonfire of the QUANGOs’, the Government’s newest quango – the Office for Budget Responsibility – says that the coalition’s approach will cost jobs, and that those job losses will cost the taxpayer £700m in Jobseekers Allowance claims alone. ?The reputable management consultancy firm ?Price Waterhouse Coopers are forecasting that a million jobs will go as austerity takes its toll – half of them in the private sector.
The Conservative Party did not win the election, despite Labour losing it. They have no mandate for this policy, and the Liberal Democrats, for supporting this, through Nick Clegg will in 2015 or earlier be consigned to history.
Dr Shibley Rahman is a research physician and research lawyer by training.
Queen’s Scholar, BA (1st.), MA, MB, BChir, PhD, MRCP(UK), LLB(Hons.), FRSA
Director of Law and Medicine Limited
Member of the Fabian Society and Associate of the Institute of Directors
