Glencore has stepped up the bidding war for Rio Tinto’s coal mines in Australia by returning with a higher offer.
The Switzerland-based mining group said it would offer $2.68bn (£2.1bn) in cash, payable in one lump sum, for Rio’s Coal & Allied business in New South Wales. This represents an advance on the $2.55bn it offered earlier this month and is considerably more than the $2.45bn offered by Yancoal, the Chinese-backed miner that is Rio’s preferred buyer.
Glencore, led by billionaire Ivan Glasenberg, has coal mines adjacent to Rio’s operations in the Hunter Valley, and believes it can make substantial savings by joining the two businesses together. Earlier this week Rio said it would stick with Yancoal’s offer, first made in January, because it had already gained regulatory approvals for the deal.
However Glencore said today it was confident of securing the same approvals and would be willing to forfeit a $225m deposit if the deal did not go through. The company believes it is in a strong position because it already has clearance from Japan, which is by far and away the biggest customer of Hunter Valley coal.
As a further sweetener, it has offered to let Rio keep the cashflows from the business until the deal completes.
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