Turquoise Hill Resources Ltd (TSX:TRQ), the developer of the Oyu Tolgoi copper-gold mine in Mongolia, rejected a US$2.7bn offer from Rio Tinto PLC (LSE:RIO) to buy the 49% interest it does not hold in the Canadian company.
Turquoise Hill’s special committee of independent directors said Rio Tinto’s C$34 per share offer does not fully and fairly reflect the fundamental and long-term strategic value of the company’s majority ownership of Oyu Tolgoi.
““Market conditions in the equity and copper markets have changed significantly since the receipt of Rio Tinto’s privatization proposal in March,” said Maryse Saint-Laurent, chair of the special committee. “At the same time, the company has continued to make positive progress on the underground project.”
Rio Tinto said it was disappointed by the decision of the special committee and said it continues to believe that the offer would deliver compelling value for Turquoise Hill minority shareholders.
“Rio Tinto will remain financially disciplined as it considers its options,” it said.
Oyu Tolgoi, which is 66% owned by Turquoise Hill, is one of the world’s largest copper and gold deposits.
The special committee said it will support Turquoise Hill’s management in raising at least US$650mln in new equity by year-end as required under its funding agreement with Rio Tinto.