Glencore (LON:GLEN) has increased its offer for Rio Tinto's (LON:RIO) coal mines in Australia, the commodity giant has said. The move comes after Rio picked an improved offer by China’s Yanzhou earlier this week.
Highlights from Glencore's statement:
Glencore has submitted an improved irrevocable binding offer ("Glencore Offer") to acquire Rio Tinto's 100% interest in Coal & Allied Industries Limited ("C&A") for US$2.675 billion cash plus a coal price linked royalty. All cash is payable in full immediately upon completion.
The Glencore Offer is fully funded and subject only to a limited number of regulatory approvals.
Glencore's Offer has been designed to address the points raised in Rio Tinto's announcement dated 20 June 2017 as follows.
· Value: Glencore's Offer is at least US$225 million greater than Yancoal's proposal.
· Payment timing: The full US$2.675 billion cash consideration is payable in full on completion (no deferred payments).
· Regulatory Risk:
o The Glencore Offer remains conditional only on approval from China, Korea, Taiwan and Australia. Japanese regulatory approval to acquire C&A has already been obtained.
o Glencore believes that there is no legal basis to consider that such approvals will not be obtained.
o Demonstrating our confidence in securing all approvals, Glencore's Offer is supported by a US$225 million deposit which will be forfeited if the transaction does not complete as a result of a failure to obtain a regulatory approval. Refer Appendix for further details on regulatory approvals.
· Timing Mitigation:
o Glencore believes that it will obtain all regulatory approvals in a timely manner and that its offer fully compensates Rio Tinto for any potential delays beyond Yancoal's expected completion date as announced by Rio Tinto.
Glencore's Offer will automatically lapse if it is not declared by Rio Tinto to be a superior proposal by 6pm (BST) on 26 June 2017 and thereafter if a binding SPA has not been executed by 4pm (AEST) on 5 July 2017.