International Coal Ventures Ltd (ICVL), a state-run joint venture, is studying an offer for Riversdale Mining Ltd to counter a A$3.9 billion (US$3.9 billion) bid from Rio Tinto Group.
ICVL appointed Citigroup Inc to examine a possible takeover offer for the Sydney-based coal company with mines in Mozambique, the venture’s chairman C.S. Verma said on Thursday.
London-based Rio yesterday bid A$16 a share for Riversdale, securing 14.9 percent of the company in pre-bid agreements.
Indian companies are seeking coal mines overseas to ensure raw material supplies for producing steel and electricity. Brazil’s Vale SA or Eurasian Natural Resources Corp may make bids, according to Sanford C. Bernstein & Co, as Tata Steel Ltd, Riversdale’s biggest shareholder, said it would study Rio’s offer “in the context of other alternatives” available to Tata.
A successful bid for control would need the support of at least one of Riversdale’s major shareholders, with the top three investors owning about 51 percent. These shareholders — Tata Steel, Passport Capital LLC and Cia Siderurgica Nacional SA — were kept informed during the talks with Rio and have not raised any objections, Riversdale managing director Steve Mallyon said in a telephone interview on Thursday.
A counter bidder may have to pay as much as A$20.80 a share, Commonwealth Bank of Australia analysts led by Tomas Vasquez said in a report.
Citigroup will submit its report in two weeks, Verma told reporters in New Delhi on Thursday after a board meeting. ICVL has not discussed Riversdale with Tata Steel, he said.
China’s Wuhan Iron & Steel Corp (武漢鋼鐵) “could also show interest,” since Riversdale on Thursday terminated a potential US$800 million investment deal with the steelmaker, Dominic Kane, an analyst at Liberum Capital Ltd, said in a report.