Tata Steel Hikes Stake in Riversdale Amid Rio Bid

tata-steel-2576185Indian steel major Tata Steel confirmed that it hiked stakes on Australia’s Riversdale Mining by another 2.9 per cent to 27.1 per cent, making it harder for competitors, mainly for miner Rio Tinto to seal its $3.9 billion bid for the Mozambique-focused coal miner. Sources said.

Tata Steel, already Riversdale’s biggest shareholder, spent more than A$100 million ($101 million) upping its stake in Riversdale to 27.1 percent from 24.2 percent, according to a shareholder notice, confirming what sources had told Reuters.

Riversdale’s second-largest shareholder, top Brazilian steelmaker CSN (CSNA3.SA), also recently increased its stake in the Australia-listed company to 19.9 percent. Tata Steel, the world’s No. 7 steelmaker, and CSN now own 47 percent of Riversdale, making it extremely difficult for Rio (RIO.L) to secure the 50.1 percent acceptances it wants before going ahead with the deal.Rio now needs almost 100 percent acceptances from minority shareholders and has so far won over just 17 percent of the company.”Rio seems to be in extreme difficulty,” said Gregory Lafitte, Asia merger arbitrage trader at LCM in Hong Kong.”It’s possible to see Rio Tinto reduce the 50 percent acceptance condition or reach a strategic agreement with Tata and CSN,” he said.Rio Tinto declined to comment on the status of its talks with Riversdale’s shareholders.

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