Turquoise Hill’s 5th biggest investor rejects Rio Tinto’s takeover bid

The fifth-biggest investor of Turquoise Hill, Sailingstone Capital Partners, said last Friday that it will vote against Rio Tinto’s intended 3.3 billion USD takeover of the Canadian miner in a shareholder meeting on November 1.

The activist investor said that Rio Tinto’s bid not only undervalues the target but it also intends to take advantage of the “material governance failures” created by independent directors of both mining companies over the last decade.

Sailingstone, a US-based fund manager specializing in resources companies that has a 2.2 percent stake in Turquoise Hill, had already said it considered the offer too low and “opportunistic”, according to mining.com.

Rio Tinto announced on September 1 that the company had reached an agreement after six months of takeover talks to buy the 49 percent of Turquoise Hill it didn’t already own for a figure about 20 percent higher than the original 2.7 billion USD bid made in August.

The deal would give the global miner a 66 percent stake in the giant Oyu Tolgoi mine in Mongolia, one of the world’s largest known copper and gold deposits. The government of Mongolia owns the remaining 34 percent.

Rio Tinto has had a rocky relationship with the Quebec-based miner, particularly over how to fund Oyu Tolgoi’s expansion. It has also drawn criticism from some of Turquoise Hill’s minority shareholders about the control it exerts over the company.

The global miner, which has mined copper from Oyu Tolgoi’s open pit for a decade, and the Mongolian government ended a long-running dispute over the 7 billion USD expansion of the mine earlier this year.

Rio Tinto CEO Jakob Stausholm has said that the proposed takeover would simplify governance, improve efficiency and create greater certainty of funding for the long-term success of the Oyu Tolgoi project.