Rio Tinto’s Turquoise Hill takeover in doubt as Quebec’s securities regulator studies fairness of side deal negotiated with dissidents – by Niall McGee (Globe and Mail – November 7, 2022)

Turquoise Hill Resources Ltd. is postponing its shareholder vote on Rio Tinto PLC’s proposed takeover of the Canadian copper company yet again, as Quebec’s securities regulator considers whether a side deal negotiated with dissident shareholders is legal, injecting even more uncertainty into the market.

London-based Rio last week said it had reached an agreement with Pentwater Capital Management LP and SailingStone Capital Partners LLC, under which they would be paid out 80 per cent of the takeover amount being offered to all Turquoise Hill shareholders and, after a ruling from an arbitrator, the remaining 20 per cent, plus interest, and potentially much more.

The arrangement could see the two U.S. investors walk away with tens of millions in extra profits. In exchange, the two investment firms, which had both been vociferously opposed to the $4.2-billion acquisition of Turquoise Hill by Rio, agreed to sit out the coming shareholder vote, making it highly likely the deal will succeed.

Rio already owns 51 per cent of Turquoise Hill and has control over several board seats. The giant Anglo-Australian miner is offering to buy the 49 per cent it doesn’t already own.

For the rest of this article: