Rio Tinto Takes Majority Stake in Ivanhoe

Douglas Bryce

Jan 24, 2012

By Peter Koven, The Financial Post

For the first time in recent memory, a creeping takeover in Canada has succeeded.

Rio Tinto Ltd. announced Tuesday it has done the inevitable, boosting its stake in Ivanhoe Mines Ltd. to 51% from 49% and seizing control of the Vancouver-based miner. Rio Tinto can now force changes to the Ivanhoe board of directors, and a source said it might happen after Rio conducts a strategic review of the company.

Creeping takeovers in Canada are extremely rare, particularly because target companies can block them with shareholder-rights plans (or “poison pills”). M&A lawyers said this is the first case they can recall in many years in which one large company got control of another without making an offer to all shareholders.

However, this was always a logical outcome in the unique Ivanhoe-Rio relationship. In fact, it is proof that the partnership between the two miners worked the way both sides hoped it would.

“There’s been a blueprint for this entire process that’s been public for a long time,” said Doug Bryce, a partner and M&A specialist at Osler Hoskin & Harcourt LLP. “It’s the cost of developing a project of epic proportions that required billions and billions of dollars of capital.”