(Bloomberg) – Rio Tinto Group survived an attempt by an activist investor to force it to review its dual listing structure, with insufficient shareholders supporting the proposal.
Rio urged shareholders to reject the proposal. Nevertheless, almost 20% voted for the Palliser Capital UK Ltd.’s resolution, and the world’s No. 2 Mining Company said it will continue to interact with shareholders with the subject.
Polls require support from at least 75% of Rio shareholders in the two listed entities, although strong support under that threshold is expected to increase the demand for scrutiny for dissatisfied investors.
The result will be seen as a victory for Rio’s board of directors and management, which they oppose the resolution. Still, as peers like BHP Group (the double list that eventually crashed), the problem is unlikely to go away.
The driving force behind the review was chaired by London-based hedge fund Palliser, which holds about $88 million in Rio stock. Some believe that the double-rise structure is an “unrestricted failure” that has resulted in value disruption of about $50 billion and hindered the ability of miners to carry out large-scale mergers and acquisitions.
Rio’s board, in turn, said the review process would cost hundreds of millions of dollars, causing serious tax impacts and bringing little benefit to shareholders.
Rio is structured by two separate entities (one listed on the London Stock Exchange and the other listed on the Australian Stock Exchange), but acts as a group, both companies sharing returns such as fees, income, profits and dividend delivery.
Its largest shareholder base is biased towards London. According to Palliser’s model, Rio will still trade in the UK, but through a secondary listing managed by a parent company, headquartered in Australia.
The miners’ board of directors spent months urging shareholders not to vote with Palliser. It said it had conducted an independent review of the list and concluded that it was not in Rio’s best interest to merge the company.
(The entire details are updated)
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