Glencore Chief Executive Officer Ivan Glasenberg has
submitted a proposal to buy Rio’s Coal & Allied unit in
“If Rio Tinto determines that the Glencore proposal is a
superior proposal, Yancoal will have a right to match or better that proposal,”
Yanzhou said in a
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Yanzhou has received outbound investment approval from
“The Glencore decision puts Rio Tinto in a very difficult situation,” said Helen Lau, a Hong Kong-based analyst with Argonaut Securities (Asia) Ltd. “It’s hard for the board to reject a higher offer, with better terms, but at the same time, it could be even more difficult to reject Yanzhou Coal, which has got almost all government clearance for the deal.”
If Glencore’s bid succeeds, it would also seek to buy Mitsubishi Corp.’s stakes in two coal ventures in the same area for $920 million. Glencore would sell at least $1.5 billion in assets to mitigate the cost, it said in Friday’s statement.
The Rio coal operations are adjacent to existing Glencore
“Yancoal has to wait and watch, but also has to carefully calculate whether a higher bid could justify the purchase to its own shareholders,” Lau said. “A good asset at the current price may not be a good one with another 10 percent premium. They have to make sure state investment is spent carefully and soundly on high-quality assets.”
Glencore’s bid for the coal assets comes just weeks after it expressed interest in a combination with grain trader Bunge Ltd. as Glasenberg steps up expansion efforts following a painful commodities downturn in which it was forced to sell assets and cut costs.
The trader has already returned to deal making. In December,
it teamed up with shareholder Qatar Investment Authority to buy almost 20
percent of Russian oil producer Rosneft PJSC. Glencore also agreed to a $960
There is no certainty that any transaction will be concluded, Glencore said Friday, adding that the deal would be funded from existing cash and committed facilities. Glencore will only be bound once a binding share purchase agreement is concluded with Rio Tinto. The proposal expires if a binding purchase agreement hasn’t been executed by June 26.Peter Grauer, the chairman of Bloomberg, is a senior independent non-executive director at Glencore.