Global resources giant Rio Tinto on Thursday made a 3.9 billion US dollar bid for Australian coal miner Riversdale in its first major play since a failed iron ore merger with rival BHP Billiton.
Rio called the all-cash, 16 Australian dollar (16 US) per share offer "attractive" and said it already had pre-bid agreements on 14.9 percent of Riversdale's shares, including with a number of its directors.
"The acquisition of Riversdale is in line with our growth strategy of investing in, developing and operating large long-term cost-competitive mines and businesses," said Rio Tinto energy chief Doug Ritchie.
Riversdale has three coal mining projects in Africa, including major operations in Mozambique. Ritchie said the bid underscored Rio's commitment to the continent, including Guinea's massive Simandou iron ore field.
"We believe Rio is one of the few groups in the world with the capabilities, values and incentives to develop the projects quickly and to a world-class standard, bringing considerable benefit to the people of Mozambique," he said.
Riversdale said its directors recommended the deal, which is valued at a 46 percent premium to the value of its shares before speculation on a tie-up with Rio started, "in the absence of a superior proposal".
"The Rio Tinto offer is transformational for Riversdale," said executive chairman Michael O'Keeffe.
Many of the miner's projects were in pre-production and there was "significant time, risks and uncertainties involved in bringing those assets to the production stage", Riversdale added.
"Riversdale is at the crossroads of having to commit significant resources and funds to develop our coal projects and to make substantial investments in infrastructure," said managing director Steve Mallyon.
"The offer provides immediate value certainty and, if accepted, shareholders do not have to inject further equity to fund the development."
India's Tata Steel owns 24 percent of Riversdale and is rumoured to be considering a rival bid, along with Brazil's Vale, which has already made significant investment of its own in Mozambique.
India is the primary target market for Riversdale's coking coal, used in steelmaking, and the country's steel ministry has reportedly asked a consortium of five state-run companies to moot a bid for the Australian miner.
Rio Tinto's Simandou project, one of the world's largest iron ore fields, has been stymied by political upheaval in Guinea and Riversdale's established presence in Mozambique would be a lucrative asset for the mining titan.
It is the Anglo-Australian resources giant's first attempted acquisition since the collapse of a lucrative iron ore tie-up with rival BHP Billiton in October.
Rio's last big acquisition, the 2007 takeover of Canada's Alcan, was expensive and hugely unpopular.
Riversdale shares rose 3.1 percent to 16.80 Australian dollars after exiting a trading halt.
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