RioTinto and Japan's Mitsubishi Corp have offered to jointly buy out minority investors in Australia's sixth-largest coal miner, Coal and Allied Industries.
Cash rich Rio Tinto, looking to deploy its cash resources to benefit from the low stock valuations in the current global crisis, jointly with Japanese trading house Mitsubishi Corp has offered to buying out minority investors in Coal and Allied Industries, at A$122 per share, valuing the miner at A$10.6 billion.
Through a wholly-owned subsidiary, Rio Tinto is Coal & Allied's largest shareholder with a 75.71-per cent stake. Mitsubishi Development currently holds 10.20 per cent of Coal & Allied.
Under the proposal negotiated between the two, Rio and Mitsubishi would end up with stakes of 80 per cent and 20 per cent, respectively in Coal and Allied.
It will cost Mitsubishi about $1 billion and Rio close to $500 million to complete the buyout.
Perpetual Limited, the largest institutional shareholder of Coal & Allied with a 6.3-per cent of the stock, has indicated that it is supportive of the Proposal in the absence of a superior proposal emerging.