Tata Steel rises on US$1.12 billion sale of Riversdale stake

Finance

Publishing Date: 17 Jun 2011 10:42am GMT
Author: Mining Journal

Tata Steel Ltd, India’s biggest producer, gained the most in three months after agreeing to sell its stake in Australia’s Riversdale Mining Ltd to Rio Tinto for A$1.06 billion (US$1.12 billion).

Rio Tinto gained almost full control of Sydney-based Riversdale after Tata Steel said it would sell its 26.27% stake that has almost doubled in value in less than four years. The transaction takes Rio Tinto’s holding to 99.47%.

Tata's shares climbed as much as 3.3%, the most since March 14, to 571.50 rupees and traded at 568.50 rupees as of 9:17 a.m. in Mumbai. The benchmark Sensitive Index of the Bombay Stock Exchange rose 0.3%.

Rio Tinto’s acquisition of Riversdale gives the world’s second-largest mining company reserves of coking coal in Mozambique as prices for the steel-making ingredient increase. Tata Steel had said as recently as April 25 that it would continue to hold its stake in Riversdale. Rio Tinto’s offer of A$16.50 a share is due to close today.

The group said in April it will seek to de-list Riversdale from the Australian stock exchange once the takeover is completed. Rio Tinto shares dropped as much as 0.4% to A$78.06 in Sydney and traded at A$78.18 as of 1:49 p.m. local time.

June 17 (Bloomberg)