Rio takeover of giant copper mine opposed by top investor
BNN Bloomberg
A top investor in Turquoise Hill Resources is opposing a proposed takeover by Rio Tinto, arguing the purchase price undervalues the company that’s behind one of the world’s largest copper mines.
Rio Tinto agreed last week to buy out the stake in Turquoise Hill it didn’t already own in a deal valued at about US$3.3 billion, giving it more control of the Oyu Tolgoi mine it’s developing in Mongolia.
Pentwater Capital Management, which has been a longstanding critic of Rio’s management of the asset, said in a statement Friday the purchase price ascribes an equity value of $8.65 billion (US$6.66 billion) to the Montreal-based miner, which it argues is a fraction of the free cash flow it expects the company to generate over the next decade.
Pentwater owns a nearly 12 per cent stake in Turquoise Hill. Rio already owns 51 per cent of Turquoise Hill, but more than half of the remaining shareholders must back the acquisition for the deal to proceed.
