* Says did not consider a higher bid "appropriate"
* Says pricing, outlook, resources factored in decision
* ICVL looking at coal assets in other countries
By CJ Kuncheria and Prashant Mehra
NEW DELHI/MUMBAI, Jan 27 (Reuters) - An Indian state consortium has decided not to counter Rio Tinto's $3.9 billion bid for Australian miner Riversdale RIV.AX, likely ending the possibility of a bidding war for the Africa-focused coal firm.
Anglo-Australian miner Rio Tinto's (RIO.AX) (RIO.L) offer to buy Riversdale gathered steam this week after Riversdale's board unanimously recommended the bid.[ID:nL3E7CO04Y]
The Indian consortium, which had earlier said it would consider a bid and had hired Citigroup <C.N > to do due diligence on the firm, on Thursday said it decided against an offer.
"We did not think it was an appropriate case to bid higher than Rio's offer," Partha Bhattacharyya, chairman of Coal India (COAL.BO), one of the consortium members, told Reuters.
The consortium is scouting for coal assets in other countries, Bhattacharyya said. "You should see some action in the next couple of months," he added. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For story on Indian group weighing a bid [ID:nSGE6BN03L] SCENARIOS on Tata Steel's options [ID:nSGE6BQ02B] DEALTALK on potential rival bidders [ID:nLDE6BM0VE] INTERVIEW with Riversdale managing director[ID:nL3E7CO089] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
"We discussed in detail pricing scenario, future outlook, resources available, and took a conscious decision not to bid," C.S. Verma, head of ICVL told reporters.
Rio's offer values Riversdale at A$16 a share. Analysts have said any new bidder would probably have to pay A$18 to A$20 a share, valuing the company at $4.9 billion at the top end.
"India is very new to the multi-billion dollar acquisition game, especially on the public sector front," said Jagannadham Thunuguntla, head of research at SMC Global Securities.
"I don't think money is a concern. More than that, it's decision-making and experience in acquiring and running these companies," he said.
The four listed state firms in the group held combined cash reserves of around 440 billion rupees ($9.6 billion) as of the end of September, but all four also have ambitious expansion or acquisition plans of their own.
Citigroup had recommended ICVL pursue a counter bid, a source familiar with the deal had earlier told Reuters.
The consortium, International Coal Ventures Ltd (ICVL), comprises of utility NTPC (NTPC.BO), Steel Authority of India Ltd (SAIL.BO), iron ore miner NMDC (NMDC.BO), Coal India and steelmaker Rashtriya Ispat Nigam Ltd.
Riversdale, with coking coal reserves in Mozambique, is an attractive asset for companies seeking to secure coal supplies amid soaring Asian demand for the key steel-making ingredient.
Indian steel, power and coal companies have been scouting for overseas coal mines to satisfy demand from the fast-growing economy, Asia's third largest.
Riversdale's Benga project in Mozambique could be expanded by a further 6 million tonnes a year for 20 years, which analysts believe would raise the value of Riversdale shares to over A$20 each. Riversdale shares closed at A$16.24 in Thursday trade.
Analysts did not expect ICVL to make a counter offer partly because of the complex nature of a consortium of five state-run firms, and partly because Rio was expected to win any bidding war.
Riversdale's top shareholder, Tata Steel (TISC.BO), the world's No 7 steelmaker, backed Rio's offer this week, after abstaining to vote on it last month.
But the Indian steelmaker has said it views Riversdale as a strategic investment and would hold on to its stake.
Riversdale's two biggest shareholders, Tata Steel with 24.2 percent and Brazil's CSN (CSNA3.SA) with 16.3 percent, are both mainly interested in locking in coking coal supplies and have not committed to selling shares to Rio, whose offer will close Feb 18. (Additional reporting by Sumeet Chatterjee in MUMBAI; Editing by Jui Chakravorty)