Rio Tinto and Mitsubishi have made an informal bid of $122 per share to take full ownership of Coal & Allied Industries. The bid values the company at $10.6 billion, a 34% increase on the closing price last week.

 

As part of the deal, shareholders will be entitled to retain the dividend of A$1.20 per share scheduled to be paid on 26 August 2011. The total cash amount of A$123.20 per share represents a:

  • 35.4 per cent premium to Coal & Allied's closing price of A$91.00 on 5 August 2011, which was the last trading day before Rio Tinto's approach; and
  • 21.9 per cent premium to the one month volume weighted average price of Coal & Allied shares of A$101.04 as at 5 August 2011.

 

Rio Tinto and Mitsubishi already own 85.9% of Coal and Allied, and the purchase of remaining shares would cost them $1.49 billion. The acquisition, subject to acceptance of the offer by 75% of  remaining shareholders, would lead to the delisting of Coal & Allied, with significant administrative as well as operational savings. Perpetual, the largest institutional shareholder with around 45% of the free shares, has already indicated its support for the offer.

 

Coal & Allied  has operations in the Hunter Valley at Bengalla, near Muswellbrook,  at Mount Thorley Warkworth, 15 km south-west of Singleton and its Hunter Valley Operations (HVO), located 24 km north west of Singleton.