Rivals may challenge Rio's move

Anglo-Australian miner Rio Tinto offered $3.9bn (£2.5bn) to buy African-focussed coal miner Riversdale in an agreed deal that is likely to be challenged by rivals seeking to secure coking coal reserves.

By The Newsroom

Published 23rd Dec 2010, 20:08 BST

Updated 23rd Dec 2010, 20:08 BST

Rio's first big acquisition since its ill-timed Alcan buy in 2007 is a play on soaring Asian demand for the key steel-making ingredient, but needs the backing of at least one of Riversdale's three large shareholders, including India's Tata Steel and Brazilian steel group CSN.

While fund managers said the steelmakers may oppose Rio's offer, Riversdale's managing director Steve Mallyon said he expected a positive response.

The company's third largest shareholder, US-based fund Passport Capital, had committed an unspecified number of its shares to a pre-bid agreement that gives Rio Tinto options over 14.9 per cent of Riversdale's stock, Mr Mallyon said.

Other interested parties believed to be taking a look at Riversdale include Anglo American, ArcelorMittal, and Strata, according to those close to the matter.

India