CA - Rio Tinto increase offer for Turquoise Hill likely to get holder approval - analyst

Rio Tinto's ( NYSE: RIO ) increased C$43/share deal to buy the remainder of Turquoise Hill ( NYSE: TRQ ) it doesn't already own is likely to win shareholder approval, according to Canaccord.

"The offer price is in line with both our target price as well as precedent transaction multiples, and given current market conditions and the makeup of TRQ's current minority share register, we believe this offer price will earn the 25% supporting vote required to complete the deal," Canaccord analyst Dalton Baretto wrote in a note earlier on Thursday. Canaccord has a buy rating and C$42 price target on the stock.

The C$43.00/shr offer price represents 0.80x Canaccord's  NAV of C$53.62/shr, and is in line with precedent transactions. The deal also represents a 67% premium to TRQ's share price on March 11, prior to the initial offer from RIO.

Baretto believes the emergence of another bidder is possible, though "extremely unlikely."

Rio's ( RIO ) C$43 deal, which values the Turquoise Hill ( TRQ ) minority share capital at ~US$3.3B, comes two weeks after Turquoise Hill rebuffed a lower offer of C$40/share .

Rio ( RIO ) said the deal, which also agreed to several new measures aimed at improving Turquoise Hill's ( TRQ ) near-term liquidity, represents its best and final offer.

A Dealreporter item last week said that a number of large holders of Turquoise Hill Resources ( TRQ )  were said prepared to oppose Rio Tinto's ( RIO ) earlier revised offer for the company.

Large Turquoise Hill ( TRQ ) shareholders Pentwater Capital and SailingStone Capital reportedly said in March that Rio's original offer for C$34/share was too low.

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