Rio Tinto, Mitsubishi sweetens offer for Australia's Coal & Allied Industries

Rio Tinto and Mitsubishi Corp yesterday raised their joint $1.55 billion bid for the 14 per cent stake they do not yet hold in Australian coal producer Coal & Allied Industries to $1.58 billion, to secure support of minority shareholders for the deal.

Rio Tinto and Mitsubishi increased their offer by $3 a share to $125 from its 8 August offer off $122 a share, (See: Rio Tinto, Mitsubishi offer to buy out minority investors in Australia's Coal & Allied)  which now values the Brisbane-based coal company at around A$10.8 billion ($11.3 billion). 

"The revised proposal has been unanimously recommended by the proposal response committee members subject to the independent expert concluding that the scheme is in the best interest of Coal & Allied's minority shareholders and there being no superior proposal," Coal & Allied said in the statement.

Rio and Mitsubishi own 75.7-per cent and 10.2-per cent, respectively, in Coal & Allied and under a negotiated agreement, Rio will hold 80 per cent of Coal and Allied while Mitsubishi will hold 20 per cent, post acquisition.

Although Coal & Allied board had unanimously recommended the offer, minority shareholders holding 14 per cent of the stock were seeking a superior offer. The revised offer also includes a special dividend of $8.

Coal & Allied, Australia's sixth-largest coal miner by output, has coal operations in Mount Thorley Warkworth, Hunter Valley, and Bengalla areas in the Hunter Valley region of New South Wales.

Its products include thermal coal, semi-soft coking coal, and pulverised injection coal, which are used in electricity generation, steel production, and cement manufacture.