The battle over Rio Tinto’s (ASX, LON:RIO) coal assets in Australia’s Hunter Valley seems to have come to an end as the miner has picked an improved offer by Yancoal Australia (ASX:YAL), a subsidiary of China’s Yanzhou Coal Mining, over Glencore’s (LON:GLEN) bid.
Shareholders should vote for the $2.45 billion proposal from Yancoal for the Coal & Allied unit in New South Wales, the company said Tuesday. Even though the price is lower than Glencore’s $2.55 billion bid, Rio said the prospect of regulatory approval and funding certainty made Yancoal a better choice.
Early this month, Glencore made a surprise bid for Rio’s assets, which are near its own mines in the Hunter Valley. A few days later, Yancoal Australia stroke a deal with Mitsubishi to buy its 32.4% stake in the same two mines.
Analysts say there’s still a chance the Swiss commodities trader and miner comes back with a higher bid.
The deal with Yancoal represents the first major sale of an operating mine under Rio’s new chief executive Jean-Sebastien Jacques.
Yancoal, which owns or operates seven coal mines in Queensland and NSW, said in January that the acquisition would make it Australia’s largest pure-play coal producer.