What happened
Shares of Turquoise Hill Resources (TRQ +0.00%) surged 31.9% on Monday after the mining company received a takeover bid from Rio Tinto (RIO +1.16%).
NYSE: TRQ
Key Data Points
So what
Rio Tinto is seeking to purchase the 49% of Turquoise Hill's stock that it doesn't already own. To do so, the mining titan offered to buy Turquoise Hill's remaining shares for roughly $2.7 billion in cash. The per-share offer of 34 Canadian dollars ($26.51) represents a premium of 32% to Turquoise Hill's closing price on Friday.
Image source: Getty Images.
Rio Tinto's bid comes after the Government of Mongolia agreed to allow the Oyu Tolgoi copper and gold mining project to begin underground operations. Should Rio Tinto acquire full ownership of Turquoise Hill, its stake in the project would rise to 66%, with Mongolia laying claim to the remainder.
"The proposed transaction would enable Rio Tinto to work directly with the Government of Mongolia to move the Oyu Tolgoi project forward with a simpler and more efficient ownership and governance structure," CEO Jakob Stausholm said.
Now what
The companies stressed that no deal has been reached and the acquisition may not occur. A special committee of Turquoise Hill board members will evaluate Rio Tinto's proposed terms. Should the committee come out in favor of the transaction, it will still require shareholder and regulatory approval.
Still, with its stock now trading close to the proposed purchase price, investors are indicating that they believe Turquoise Hill's board and shareholders will ultimately approve the deal.
