(Bloomberg) — Rio Tinto Group has struck a deal with key shareholders of Turquoise Hill Resources Ltd. to sit out an upcoming takeover vote, paving the way for its approval at a special shareholders’ meeting.
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The London-based mining giant has agreed with Turquoise Hill shareholders Pentwater Capital Management LP and SailingStone Capital Partners LLC that they will withhold their votes in exchange for C$34.40 ($25.23 per share) and enter into arbitration over a “remaining consideration” for their shares, it said in a statement to the Australian Stock Exchange Wednesday. Rio said its C$43 per share offer for the Canadian miner remains its best and final.
Turquoise Hill had earlier rescheduled the meeting to Nov. 8, the Montreal-based company said Tuesday in a statement that came out about half an hour before investors were set to gather in Montreal to consider the transaction. That delay raised doubts about Rio’s bid to gain control of Mongolia’s Oyu Tolgoi, one of the world’s biggest copper mines.
The delay comes weeks after Sailingstone and Pentwater, both large investors in Turquoise Hill, balked at Rio’s offer, saying that it undervalued the company. Institutional Shareholder Services Inc. echoed that view, while advisory firm Glass Lewis & Co. recommended investors support the transaction in part due to “significant near-term financing risks” faced by Turquoise Hill.
Rio has sought the 49% of the Canadian miner it doesn’t already own, in a deal valued at about C$4.24 billion. At stake is Rio’s control of Mongolia’s massive Oyu Tolgoi project, which is expected to become the world’s fourth-largest copper mine.
Rio Tinto has repeatedly said it will not sweeten its terms for the Canadian miner, with Chief Executive Officer Jakob Stausholm making it clear in September that this was the company’s final offer.
The vote required two-thirds approval of all votes from Turquoise Hill shareholders, including Rio Tinto, and approval of a simple majority of votes from minority shareholders.
–With assistance from Scott Deveau, Mathieu Dion and Thomas Biesheuvel.
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