In an attempt to gain shareholders approval of Riversdale, mining giant Rio Tinto has raised the offer price for the Australian miner.
Rio said it is willing to revise its offer to $16.5 a share from the current $16, if 50% of shareholders gave their approval in favour of the deal by 23 March. The new offer price values Riversdale at about $4 billion.
The new offer price represents “a highly attractive premium”, Rio said in a statement.
The Sydney based Riversdale operates large coking coal mines in Mozambique.
There have been no counter bids after Rio made its offer of $3.5 billion for the first time in December 2010.
However, Rio added that it will not raise its offer further in the absence of competing bids.
“The choice for Riversdale shareholders is clear – accept the offer or risk seeing their share price return to pre-bid levels”, said Doug Ritchie – chief executive of Rio Tinto Energy.
“There is no reason to delay acceptance”, he added.
Tata Steel of India is the largest shareholder of Riversdale. Speculations have been going on that Tata Steel or Brazil’s Vale may make counter offers. However, both the companies refused to confirm the news.
“I can say that from the calls that I’ve made (to the institutional shareholders) in the last few hours, there is some growing support for Rio Tinto”, said Steve Mallyon – chief executive of Riversdale to Reuters.
Steel industries are the main consumers of high grade coking coals.
Analysts believe at the right price, Riversdale is a highly lucrative target. The company operates two mines in Mozmbique, one with an estimated reserve of 9 billion tonnes and the other has around 4 billion tonnes of reserves.