Turquoise Hill Resources Ltd. (NYSE: TRQ) (TSX:TRQ) jumped over 14% to $31.35 on Thursday that it released that it has signed a contract in principle and entered into a term sheet with Rio Tinto International Holdings Ltd. in respect of a transaction whereby Rio Tinto would purchase the around 49% of the issued as well as outstanding shares of Turquoise Hill that Rio Tinto does not currently own for C$43 per share in cash.
The Transaction is the outcome of protracted talks between Rio Tinto and Turquoise Hill’s Special Committee of Independent Directors, which began after Rio Tinto’s enhanced non-binding offering of C$40 per share was received on August 24, 2022. The C$43 per share consideration given as part of the Transaction, which has the Special Committee’s unanimous endorsement, is the result of these negotiations in the end.
On Thursday, Rio Tinto announced an in-principle deal to pay $3.3 billion for the remaining shares of the Canadian company Turquoise Hill Resources, giving the multinational miner direct ownership of a sizable copper deposit in Mongolia.
Rio will pay C$43 per share in cash for the 49% of Turquoise Hill that it does not already control, which is greater than the sweetened offer of C$40 per share put up last month and represents a more than 19% premium to the stock’s most recent finish.
The international miner will now acquire Turquoise Hill’s 66% stake in Oyu Tolgoi, the biggest known copper and gold resources in the world, which is located 550 kilometers (342 miles) south of Ulaanbaatar, the capital of Mongolia. The agreement is subject to shareholder approval.
Approximately six months have passed since Turquoise Hill rejected Rio’s initial offer of C$34 per share on the grounds that it was too low.
Rio Tinto Chief Executive Officer Jakob Stausholm stated, “Rio Tinto is dedicated to bringing Oyu Tolgoi ahead in direct cooperation with the government of Mongolia to realize its full potential for all stakeholders.”
“This deal… will streamline governance, increase effectiveness, and offer greater financing certainty for the Oyu Tolgoi project’s long-term viability.”
In order to provide the Canadian company with short-term liquidity, Rio and Turquoise Hill also reached an agreement on Thursday to modify certain finance agreements, according to the global miner. The agreements include expanding the early advance facility from $400 million to $650 million and extending the deadline for raising $650 million in equity and repaying $650 million in debt until at least March 2023.
Rio has agreed to take part proportionately in an initial stock offering as part of the modified agreements.