* 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 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
"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
"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
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
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)