3rd UPDATE: Rio Tinto Currently Has No Plan To Takeover Ivanhoe
December 13 2011 - 7:49AM
Dow Jones News
Rio Tinto PLC (RIO) said Tuesday it reserves the right to
increase its stake in Canadian mining concern Ivanhoe Mines Ltd.
(IVN.T) but doesn't have any plans to make a full takeover offer
after winning an arbitration process involving Ivanhoe.
The Anglo-Australian miner has been successful in its challenge
to protect its rights against a poison pill defense adopted by
Ivanhoe; Rio will be able to maintain its 49% stake if any bid for
Ivanhoe triggers the smaller company's shareholder rights plan
adopted last year, Ivanhoe said in a statement.
It also frees Rio to increase its stake beyond the 49% cap
agreed between the companies under a five-year-old pact due to
expire Jan. 18, something many analysts have said is likely at some
point.
Depending on the evaluation of a series of factors, "Rio Tinto
may seek opportunities to increase its shareholding in Ivanhoe to a
majority position but currently has no intention of making a full
takeover bid for Ivanhoe's shares," Rio Tinto said in a
statement.
It however said it reserves the right to change its intention in
the future.
Ivanhoe is majority owner of the massive Oyu Tolgoi copper and
gold project in Mongolia, which founder and Chief Executive Robert
Friedland has said could become one of the world's largest mines
and a major driver of the small Asian country's economy for
decades.
Rio already is Ivanhoe's largest shareholder, having steadily
increased its holding over the past two years, and is manager of
the Oyu Tolgoi project. It also effectively controls the
Vancouver-based company's board, with three employees and four
nominees among the 14 directors.
The companies had turned to arbitration after Rio claimed the
so-called poison pill adopted by Ivanhoe's board in May 2010
breached its rights under a 2006 agreement between the
companies.
Ivanhoe said its shareholder rights plan can remain in effect
until April 2013, but if it is triggered it will be subject to
Rio's right to maintain the relative size of its holding if Ivanhoe
issues shares. Ivanhoe had argued the scheme was necessary to give
its board time to consider any bid and to explore alternatives,
which analysts have said was an attempt to create a bidding war if
Rio launched a takeover bid.
Ivanhoe said the arbitrator also ruled against its counterclaim
that Rio had breached certain obligations under their
agreement.
"We will continue to strive to ensure that all Ivanhoe
shareholders are treated fairly," said David Huberman, chairman of
Ivanhoe.
Ivanhoe owns 66% of Oyu Tolgoi, which is due to start commercial
production in the middle of 2013, and the Mongolian government owns
the remaining 34% stake.
Oyu Tolgoi is expected to be one of the world's largest mines
when fully operational. Annual output in the first 10 years is
projected to average 1.2 billion pounds of copper, 650,000 troy
ounces of gold, and more than three million ounces of silver.
-By Robb M. Stewart and Alex MacDonald, Dow Jones Newswires; +44
(0)207 842 9328; alex.macdonald@dowjones.com
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