Rio Tinto activist investor Palliser urges miner to lodge counterbid for Teck Resources: Reuters
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The news: Activist investor Palliser Capital has ramped up its pressure on Rio Tinto to submit a “now or never” counterbid for Teck Resources, arguing that that the miner should unify its dual-listed structure and spin off its base metals business to create a copper giant, a letter seen by Reuters reads.
The context: The letter sent by Palliser to the Rio Tinto board dated 17 October urged the company to push back on Teck’s agreed merger with Anglo American to gain control of a tier-one copper portfolio that could produce a combined 1.3 million metric tonnes per year.
Sources told Reuters that Palliser, which holds a stake of approximately USD400 million in Rio Tinto, confirmed the letter’s authenticity but declined to comment.
Palliser’s letter said the deal would diversify Rio beyond iron ore, unlock USD800 million in cost synergies and speed up copper growth by a decade at lower risk and cost than greenfield expansion.
The activist proposes that Rio Tinto would unify into a single holding company based in Australia, eventually splitting into two entities: on focused on copper, aluminium and zinc in Canada, and the other on iron ore in Australia.
"Unification is not optional - it is a prerequisite for any credible strategic combination," the letter said, telling the board to act before the Anglo-Teck merger is finalised. Anglo and Teck agreed to merge without offering a premium to shareholders, who will vote on the deal on 9 December.
In response to the letter, Rio Tinto told Reuters it remained focused on "maximising the value we deliver for shareholders", and will provide an update on its strategy at its Capital Markets Day later this year.
Rio has previously urged shareholders to vote down proposals by Palliser to review possible unification of its dual-listing.
Palliser has been pushing for Rio to abandon its listing on the London Stock Exchange (LSE) since May 2024, when Palliser’s CIO James Smith argued that the dual-listed structure is preventing Rio from chasing all-stock takeovers because of the company’s valuation gap and complex structure, adding that there was a potential of nearly a 40% upside. He said the move would unlock billions tax credits that Australian investors are eligible for.
The source: Reuters
