Rio Tinto Wins Ivanhoe's Poison Pill Challenge

Submitted by Share Market Writer on 14 December, 2011 - 14:27

Rio Tinto (RIO) has won the poison pill challenge set by Ivanhoe Mines that refrains the Australian miner to increase its stake in Ivanhoe. After 18 months of dispute, an arbitrator decided that Rio Tinto may buy additional shares after its standstill agreement expires on January 18, 2012.

The Australian miner and Ivanhoe were in arbitration over the latter's shareholder rights plan that is preventing Rio Tinto to increase its stake without making a bid for a full takeover. Ivanhoe defended that its shareholder rights plan was created to protect all shareholders while allowing takeover bids. However, the independent arbitrator appointed last year to settle the dispute ruled in favour of Rio Tinto.

After the decision, different speculations started about Rio Tinto's plans to completely takeover Ivanhoe Mines. As Rio Tinto owns 49 per cent of Ivanhoe, the Australian mining group reported that such speculations are currently not in their plans; saying through a company statement that, "Rio Tinto may seek opportunities to increase it shareholdings in Ivanhoe to a majority position but currently has no intention of making a full takeover bid for Ivanhoe's shares."

Despite the final decision of the arbitrary, Ivanhoe announced that it is seeking its legal counsel's help to evaluate the implications of the results, as their shares decline in Canadian markets overnight.

Rio Tinto and Ivanhoe are joint-venture partners developing the Oyu Tolgoi copper and gold project in Mongolia.