Pentwater weighs legal action over Rio Tinto-Turquoise Hill deal

LONDON (Reuters) -Pentwater Capital Administration LP, the second-largest shareholder of Turquoise Hill Sources Ltd, mentioned on Friday it opposes Rio Tinto’s acquisition of the Canadian miner, and was weighing authorized choices to thwart the deal.

The activist investor added that it now owns 11.67% of Turquoise Hill’s shares, after shopping for an extra 1.73% stake on the open market.

Rio Tinto agreed on Sept. 1 to take over the 49% stake it would not already personal in Turquoise Hill after sweetening an preliminary supply by round 20% to “a greatest and ultimate” $3.3 billion, hoping to spice up the Anglo-Australian mining firm’s possibilities of gaining direct possession of the huge Oyu Tolgoi copper-gold mining challenge in Mongolia.

“The proposed worth implies an fairness worth of $8.65 billion CAD, which is a fraction of the free money stream that Pentwater expects Turquoise Hill to generate over the subsequent decade,” it mentioned in a launch.

“Pentwater expects Turquoise Hill to generate over $10.5 billion CAD of free money stream via 2030.”

Shares of Turquoise Hill, which fell 3% after Pentwater’s announcement, have gained greater than 50% since Rio’s preliminary supply in March. Turquoise Hill’s minority shareholders are anticipated to vote on the proposed deal across the finish of October.

Pentwater joins one other minority shareholder, SailingStone Capital Companions, in publicly opposing Rio Tinto’s supply as too low.

Future demand for copper is anticipated to be robust because of the progress of electrical automobiles, their charging stations and different renewable vitality infrastructure, because the world gears as much as decarbonise.

However costs of the steel have retreated from all-time highs on worries about slower demand from main client China and world inflationary pressures.

Pentwater mentioned it was evaluating authorized choices regarding the proposed deal.

(Reporting by Clara Denina and Ruhi Soni; Enhancing by Krishna Chandra Eluri and Paul Simao)