(Bloomberg) -- Rio Tinto Group backed an improved offer by China’s Yanzhou Coal Mining Co. to sell its Australian coal mines, snubbing a last-minute bid from Glencore Plc.
Shareholders should vote for the $2.45 billion offer from Yancoal for its Coal & Allied unit in New South Wales, Australia, Rio said in statement Tuesday, citing price, the likelihood of regulatory approval and funding certainty.
Glencore Chief Executive Officer Ivan Glasenberg submitted a $2.55 billion proposal to buy the mines on June 9. That topped an earlier offer from Yancoal that included an initial $1.95 billion cash payment and $500 million in annual installments of $100 million following completion. Yancoal responded by offering improved terms of a single $2.45 billion payment.
“Yancoal’s revised offer is the most attractive because it removes the deferred payment structure, can meet the timeline we have set for the transaction, and has given us certainty regarding the outstanding regulatory approvals required,” Rio CEO Jean-Sebastien Jacques said in the statement.
Yancoal, which is 13 percent owned by Asian commodity trading giant Noble Group Ltd., said in January that the acquisition would make it Australia’s largest pure-play producer of the commodity. Chinese state-owned Yanzhou Coal owns 78 percent of the Australian Securities Exchange-listed company.
The deal is the first major sale of an operating asset by Rio under CEO Jacques. The producer in October agreed to sell its stake in the Simandou iron ore project in Guinea to Aluminum Corp. of China, a partner in the development.
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