RIO Tinto's 3 per cent increase in its bid for coal explorer Riversdale Mining should push it close to achieving its aim of 50 per cent control by the March 23 deadline.
The increase to $16.50 a share from $16 a share, for a revised offer of just over $4 billion, was met with a flurry of buying, with 3.1 million shares changing hands at $15.06 a share, suggesting arbitrageurs have moved in to the stock.
Rio is sitting on pre-acceptances of about 19 per cent of the stock and is expected to quickly pick up another 10 per cent, with Passport Capital expected to accept for the rest of its holding and another hedge fund, Samana, also expected to accept for its 5 per cent.
The key to the battle then lies with whether Rio can get more than 43 per cent of the stock.
Tata owns 27 per cent and Brazilian iron ore miner CSN is sitting on 19 per cent, with both supporting Rio as the operator of the Mozambique mines and seeking offtake agreements.
One argument suggests if Rio gets 43 per cent, then Tata will tip in 7 per cent to give Rio control while also maintaining a stake to balance that of CSN.
Riversdale was suspended after the bid increase with the stock price at $15.06, well below the $16.50 bid price, which is conditional on Rio getting over 50 per cent.
Rio is being advised by Macquarie with Passport being advised by Gresham.
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