Cash, scrip offer in Comalco takeover

By FIONA ROTHERHAM

A share alternative is included in Rio Tinto's takeover offer for the remaining publicly held shares in Comalco - majority owner of the Tiwai Pt smelter.

The long-expected takeover bid was first announced in late February at $A9.50 a share. Rio Tinto holds 72.43 per cent in Comalco and the offer is subject to it acquiring all the remaining shares.

Yesterday, Rio Tinto released a bidder's statement confirming the cash offer and also a scrip alternative of one of Rio Tinto's Australian listed shares or one from the British registry for every three Comalco shares, or any combination of the above.

The share alternative was included for Australian investors wanting to take advantage of the recently introduced capital gains tax roll-over relief.

In order not to increase its total issued share capital, Rio Tinto intends buying back on-market the same number of shares to those issued under the offer. The cash offer represents a 21 per cent premium to the Comalco share price although the most recent valuation estimated its underlying value at $A9.72 per share. Comalco shares are thinly traded and New Zealanders are thought to hold around 1 per cent.

Rio Tinto has been using the "creep" provisions of Australia's Corporation Law to steadily increase its stake in the past two years. The offer closes on May 22.