By Rhiannon Hoyle and Ian Walker
Turquoise Hill Resources Ltd. Monday said a special committee of independent directors found a takeover proposal from majority shareholder Rio Tinto PLC isn't in the best interest of the company or its minority shareholders.
Turquoise Hill, which is 51%-owned by Rio Tinto, has a 66% interest in the Oyu Tolgoi copper-gold mine in Mongolia. In March, Rio Tinto made an all-cash offer to buy the shares it doesn't hold in Turquoise Hill for 34 Canadian dollars (US$26.57) each, a 32% premium to the last closing price before the offer was announced.
This proposal valued the Turquoise Hill minority share capital at roughly US$2.7 billion.
On Monday, Turquoise Hill said its special committee was terminating its review of Rio Tinto's proposal, which it said "does not fully and fairly reflect the fundamental and long-term strategic value of the company's majority ownership of the Oyu Tolgoi project."
Preliminary indications of value conducted by TD Securities found Rio Tinto's offer "was well below a range of values implied by TD's preliminary analysis," Turquoise Hill said.
"Engagement between the parties has not resulted in a consensus on value and price or in any improved proposal from Rio Tinto," it said.
Responding Rio Tinto said that it was disappointed by the decision but still believes the deal would deliver compelling value for Turquoise Hill minority shareholders.
Rio Tinto added that it will remain financially disciplined as it considers its options.
"Rio Tinto remains as committed as ever to the long-term success of Oyu Tolgoi. While we are disappointed by this decision, we will continue to work constructively with the Board of Turquoise Hill to advance the Oyu Tolgoi project," Rio Tinto Chief Executive Copper Bold Baatar said.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com and Ian Walker at ian.walker@wsj.com
