Tata Steel, one of the top 10 steel manufacturers globally, on Thursday said it has decided to divest its entire 26.72% stake in Riversdale Mining for A$1 billion (R5,011.68 crore) to Rio Tinto in its current takeover for the Australian mining company. The sale consideration represents around 100% appreciation of value in less than four years since Tata Steel’s first investment, it said.
Tata Steel, in its statement to the Bombay Sock Exchange, informed that its board has ?considered the recent announcement of Rio Tinto Jersey Holdings to delist Riversdale Mining, following its increased shareholding to 73.20% in Riversdale Mining. Tata Steel has decided that it would not want to hold its equity investment in Riversdale, which is proposed to be delisted, without any joint venture agreement with the majority shareholder in the unlisted Riversdale Mining.?
The investment is currently held by Tata Steel Global Minerals Holding, an indirect wholly owned subsidiary of Tata Steel.
However, Tata Steel will continue in the joint venture with Riversdale Mining in Mozambique, it said.
Tata Steel shares on Thursday slipped 1.44% to close at R553.15 on the BSE. The announcement came after the close of markets. Rio Tinto kicked off its campaign for Riversdale in December last year, with an indicative offer of A$15 per share but upped its offer to secure the backing of the target’s board. Rio Tinto then in April this year became the largest shareholder in its $3.9 billion takeover target Riversdale Mining by acquiring a 49.49 % stake, triggering an offer price of A$16.50 a share. Tata Steel and Brazilian steelmaker Cia Siderurgica Nacional SA (CSN), which had increased their stakes in Riversdale to a combined 47 %, were believed to be more interested in protecting their access to future production from Riversdale?s big Zambeze project in Mozambique than in making a profit by selling into the bid.
However, later in April this year, Brazilian steelmaker CSN also sold its 19.9 % stake in Riversdale to mining giant Rio Tinto for A$780 million. ?Tata Steel continues to focus on its current holding of 35% in Riversdale Energy (Mauritius), a subsidiary of Riversdale Mining, which owns coal assets in Mozambique. The company would also look forward to work with Rio Tinto and discuss in good faith ways to enhance its participation in the Benga joint venture based on the framework captured in the joint venture agreement between Tata Steel and Riversdale Mining,? Tata Steel said.