Rio Tinto shares fell 3% to 4,625.7p in early morning trading on Thursday after the mining giant announced its acquisition of the remainder of Turquoise Hill for $3.3 billion.
The commodities group is set to acquire 49% of the issued and outstanding common shares of Turquoise Hill that it does not currently own for C$43 per share in cash.
Rio Tinto said the agreement had the unanimous approval of the independent special committee of Turquoise Hill’s board of directors.
The offer represents a premium of 67% to Turquoise Hill’s closing price of C$25.68 per share on 11 March 2022, being the day before Rio Tinto’s initial public non-binding proposal to acquire the firm.
It also represents a 125% premium on Turquoise Hill’s closing price of C$19.12 per share on 24 January 2022, the day prior to Rio Tinto, Turquoise Hill and the Mongolian Government’s agreement towards the commencement of the Oyu Tolgoi underground mine.
“The transaction simplifies the ownership structure of Oyu Tolgoi and enables Rio Tinto to focus on working in partnership directly with Erdenes Oyu Tolgoi and the Government of Mongolia to create long-term value for all stakeholders,” said Rio Tinto CEO Bold Baatar.
“Turquoise Hill minority shareholders will realise a significant and immediate cash premium for their shares at a time when uncertainties inherent in the development of the underground operations remain.”
The transaction will require the approval of 66.67% of votes cast by Turquoise Hill shareholders and the approval of a simple majority of the votes cast by minority shareholders of Turquoise Hill.
The deal is scheduled for a shareholder vote at a special meeting in Q4 2022, with the agreement expected to close shortly after if approved.
“Rio Tinto is committed to moving Oyu Tolgoi forward in direct partnership with the Government of Mongolia to realise its full potential for all stakeholders,” said Rio Tinto CEO Jakob Stausholm.
“This agreement represents another significant step following the recent commencement of the underground operations, and will simplify governance, improve efficiency and create greater certainty of funding for the long-term success of the Oyu Tolgoi project.”
