On Friday the battle for control of Rio Tinto turned geopolitical. Spectacularly so.
Chinalco, a Beijing-based mining group which counts as China’s largest aluminum producer, has hooked up with the world’s largest aluminum firm, Alcoa, and taken a 12 per cent stake in Rio.
What’s more, the stock has been acquired at £60 per share - a whopping 20 per cent premium to Thursday’s closing price.
Rio, of course, is being pursued by BHP Billiton which, under UK takeover rules, has until next week to table a firm offer or walk away.
The blocking move has been structured through a Singapore-based vehicle called Shining Prospect, owned by Chinalco and into which Alcoa is injecting $1.2bn.
Shining Prospect has said it does not intend to launch an offer for Rio itself, but reserves the right to do so if BHP proceeds and/or Rio draws the attention of another predator.
Shares in Rio surged to above £57 in London on Friday, but then reversed back to £54 as traders struggled to assess the likely outcome of the move.
In a statement, Chinalco’s president Xiao Yaqing described the move as a “strategic commitment.” Others will see it as a striking demonstration of China’s growing corporate sophistication and economic firepower.
They would seem to have been egged on by Lehman Brothers, who, along with China International Capital Corporation, are named as advisers to Chinalco. The state-controlled company holds a 38.5 per cent stake in Chalco, a $50bn entity listed in Shanghai, Hong Kong and also New York.
