CA - Proxy advisor ISS says Turquoise Hill shareholders should oppose Rio deal

Turquoise Hill Resources ( NYSE: TRQ ) -0.8% in Friday's trading after proxy advisor Institutional Shareholder Service said Rio Tinto's ( NYSE: RIO ) takeover offer undervalues the company and should be rejected.

Last month, Rio Tinto ( RIO ) offered to acquire the ~49% of Turquoise Hill ( TRQ ) shares that Rio and its affiliates do not already own for C$43/share.

"While the offer provides an escape from the immediate downside, certainty of value today comes at a cost that is too high to be tolerated... the severity of the downside risk is outweighed by the magnitude of the discount to NAV implied by the offer," ISS said in its recommendation against the deal.

Earlier this week, rival proxy advisor Glass Lewis came out in support of Rio's ( RIO ) proposed offer, which "represents a reasonable exit price and a compelling market premium for minority shareholders, on balance."

Rio Tinto ( RIO ) CEO Jakob Stausholm has said the company will not make an improved offer to acquire full ownership of Turquoise Hill .

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