By Joseph Chaney and Quentin Webb
HONG KONG/LONDON, Jan 9 (Reuters) - A Chinese company, a Western firm and several buyout houses are expected to submit final bids for Rio Tinto's borates and talc units, sources close to the matter said, in a deal that could top $1 billion.
A successful sale would be a boost for Rio the world's No.2 miner, which is selling the minerals businesses to help reduce its near $40 billion of debt.
Final offers for the units will land later this quarter, one source close to the matter said on Friday, after due diligence and meetings with U.S.-based management which are likely to take place in the next few weeks.
London and Sydney-listed Rio was not immediately available in London for comment.
It is axing 14,000 jobs, cutting capital expenditures by more than half, and seeking buyers for a host of core and non-core assets after bigger rival BHP Billiton ended its $66 billion unsolicited takeover bid in November.
The small group of bidders qualified for a second round are likely to have offered up to $1.1 billion in first-round bidding, which ended late last year, a second source said.
Failed bidders, worried about how much the borates business depends on U.S. construction, may have offered as little as $750 million, the source said.
The sources did not disclose bidders' names, and did not want to be named because the auction is at a sensitive stage.
Rio shares were down 0.1 percent at 1,728 pence by 1350 GMT, having closed 0.2 percent lower at A$43.93 in Sydney earlier.
SMALL DENT
In November, analyst Charles Kernot at Evolution Securities estimated the sale could fetch around $1.2 billion, with borates the far more valuable unit at around $1 billion. He said French industrial minerals group Imerys could bid.
British newspaper The Independent reported in November that Canada's Teck Cominco and buyout firms Apollo Global Management, CVC Capital, and First Reserve were potential bidders.
Investment bank Dresdner Kleinwort is running the auction.
Analysts say state-owned aluminium giant Chinalco is among the likely Chinese bidders for Rio's assets. The company already owns part of Rio and has said it plans to lift its stake to 14.99 percent. Chinalco is the parent of Chalco .
'The Chinese have been pretty active through the upcycle and were buying at the top of the market over the past year or so, and this is a huge opportunity for acquisitions at much more attractive asset valuations,' said Andrew Driscoll, Head of Resources Research at CLSA, adding Chinalco is primarily focused on base metals.
'Chinalco is certainly going to be a company to watch over the next couple of years, and it will be on an aggressive acquisition push,' he said.
A New York-based banker told Reuters on Thursday that up to three private equity firms were bidding, but declined to identify them due to the sensitive nature of the deal.
Borates are used in fibreglass, detergents and ceramics, and talc is used in paper, paints, plastics, ceramics, rubber, personal care and roofing.
U.S.-based Rio Tinto Borax supplies nearly half the world's refined borates, and sister company Luzenac produces more than a quarter of the world's talc.
(Additional reporting by Michael Erman in New York and Michael Flaherty in Hong Kong) Keywords: RIO BORATES/ (Editing by Dan Lalor, Reuters Messaging: quentin.webb.reuters.com@reuters.net; +44 207 542 9405) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
HONG KONG/LONDON, Jan 9 (Reuters) - A Chinese company, a Western firm and several buyout houses are expected to submit final bids for Rio Tinto's borates and talc units, sources close to the matter said, in a deal that could top $1 billion.
A successful sale would be a boost for Rio the world's No.2 miner, which is selling the minerals businesses to help reduce its near $40 billion of debt.
Final offers for the units will land later this quarter, one source close to the matter said on Friday, after due diligence and meetings with U.S.-based management which are likely to take place in the next few weeks.
London and Sydney-listed Rio was not immediately available in London for comment.
It is axing 14,000 jobs, cutting capital expenditures by more than half, and seeking buyers for a host of core and non-core assets after bigger rival BHP Billiton ended its $66 billion unsolicited takeover bid in November.
The small group of bidders qualified for a second round are likely to have offered up to $1.1 billion in first-round bidding, which ended late last year, a second source said.
Failed bidders, worried about how much the borates business depends on U.S. construction, may have offered as little as $750 million, the source said.
The sources did not disclose bidders' names, and did not want to be named because the auction is at a sensitive stage.
Rio shares were down 0.1 percent at 1,728 pence by 1350 GMT, having closed 0.2 percent lower at A$43.93 in Sydney earlier.
SMALL DENT
In November, analyst Charles Kernot at Evolution Securities estimated the sale could fetch around $1.2 billion, with borates the far more valuable unit at around $1 billion. He said French industrial minerals group Imerys could bid.
British newspaper The Independent reported in November that Canada's Teck Cominco and buyout firms Apollo Global Management, CVC Capital, and First Reserve were potential bidders.
Investment bank Dresdner Kleinwort is running the auction.
Analysts say state-owned aluminium giant Chinalco is among the likely Chinese bidders for Rio's assets. The company already owns part of Rio and has said it plans to lift its stake to 14.99 percent. Chinalco is the parent of Chalco .
'The Chinese have been pretty active through the upcycle and were buying at the top of the market over the past year or so, and this is a huge opportunity for acquisitions at much more attractive asset valuations,' said Andrew Driscoll, Head of Resources Research at CLSA, adding Chinalco is primarily focused on base metals.
'Chinalco is certainly going to be a company to watch over the next couple of years, and it will be on an aggressive acquisition push,' he said.
A New York-based banker told Reuters on Thursday that up to three private equity firms were bidding, but declined to identify them due to the sensitive nature of the deal.
Borates are used in fibreglass, detergents and ceramics, and talc is used in paper, paints, plastics, ceramics, rubber, personal care and roofing.
U.S.-based Rio Tinto Borax supplies nearly half the world's refined borates, and sister company Luzenac produces more than a quarter of the world's talc.
(Additional reporting by Michael Erman in New York and Michael Flaherty in Hong Kong) Keywords: RIO BORATES/ (Editing by Dan Lalor, Reuters Messaging: quentin.webb.reuters.com@reuters.net; +44 207 542 9405) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.