Chinalco deal still riles top Rio shareholder

13 April 2012

Major investors in Rio Tinto have rejected suggestions that support for the Chinalco deal is growing, with one top 10 investor saying shareholders were still "deeply unhappy" with the deal.

Chief executive Tom Albanese today said shareholders were warming to the company's proposed $19.5 billion tie-up with China's top aluminium maker Chinalco.

The top 10 shareholder, who requested anonymity, told Reuters: "We are not picking up any particular suggestion that people are happier with this deal than they were.

"The only aspect that they might be feeling a little more positive about is the price the Chinese are proposing to pay for the assets... particularly in light of the other things happening in the global economy.

"But the overall structure of the deal, people are still deeply unhappy with because it doesn't respect pre-emption rights."

Robert Talbut, chief investment officer at Royal London Asset Management said investors were still "very hostile" to the deal.

"(Rio) has been around and they have seen plenty of people, but the response has been very sceptical, and investors at the moment want them to think again.

"Our view is that a conventional deal is preferable to the one the board has put on the table. Currently, we will not be supporting the deal," he told Reuters.

RLAM is ranked as the 25th-largest shareholder in Rio Tinto, according to Thomson Reuters data.

CEO Albanese told the Australian Financial Review: "In the past three weeks, in all the markets, there is a greater recognition about the value proposition and that a larger financial solution is better than a smaller financial solution."

When the deal was announced last month, large investors including Legal & General Investment Management and Scottish Widows Investment Partnership expressed their dismay over the proposed Chinalco plans.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in