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Highlights:
- Rio Tinto had improved its offer to acquire Turquoise Hill.
- The new sweetened offer is valued at around US$ 3.1 billion.
- The TRQ stock jumped nearly 25 per cent following the news.
The Turquoise Hill Resources Ltd. (NYSE:TRQ) stock soared nearly 25 per cent in morning trading on August 24, gaining attention from several investors. The significant jump follows Rio Tinto Plc's (NYSE: RIO) offer to acquire the Canadian mineral exploration and development firm.
Here we discuss in detail the renewed offer of Rio Tinto before taking a closer look into TRQ's recent stock performance and financial result.
What's in the deal?
The company said Rio Tinto had raised its offer to acquire Turquoise Hill on August 24. The company has offered US$ 3.1 billion, reflecting its move to have more control over the copper-gold miner in southern Mongolia.
As per the announcement, Rio Tinto had submitted an increased non-binding proposal to the board of Turquoise Hill for acquiring around 49 per cent of the total issued and outstanding TRQ shares, which Rio Tinto doesn't own currently.
The TRQ minority shareholders would get C$40 in cash per TRQ share, according to the terms of the renewed proposal.
At the proposed deal, Turquoise Hill's minority share capital is valued at around US$ 3.1 billion while representing an 18 per cent premium to Rio Tinto's initial proposal of C$34 apiece, a 56 per cent premium to the closing price of TRQ on the Toronto Stock Exchange (TSX) on March 11, 2022.
Notably, last week Turquoise Hill declined an offer of about US$ 2.7 billion from Rio Tinto, saying that the proposal of the majority shareholders didn't reflect the firm's full and fair value.
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Financial highlights:
The Montreal, Canada-based company noted a 21.9 per cent increase in its Q2 FY22 revenue of US$ 402 million, from a revenue of US$ 329.8 million in the year-ago quarter. Its income in Q2 FY22 was US$ 93.3 million, down from an income of US$ 127.8 million in the prior year's comparable quarter.
During its Q2 FY22 earnings release, it said it had produced 30.6 thousand tonnes of copper in the latest quarter. In addition, it is on track to fulfil its annual guidance for copper production of 110,000 to 150,000 tonnes in the current year, it added.
It produced 47.6 thousand ounces of gold in concentrate in Q2 FY22. Turquoise Hill raised its gold production guidance for 2022 from a prior range of 135,000 to 165,000 ounces to a range of 150,000 to 170,000 ounces.
Bottom line:
The TRQ stock traded at US$ 29.13 at 10:34 AM ET on August 24, up 24.91 per cent from its previous close. At the time of writing, it had a trading volume of about 4.64 million.
The US$ 5.77 billion market cap firm acknowledged the improved proposal from Rio Tinto for acquiring all the outstanding common shares of the firm. Turquoise said that the proposal was delivered to the special committee of the board of directors and is currently under consideration.
Meanwhile, the improved offering marks Rio Tinto's move in advancing toward commodities that could be of great value in the future.
