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.co.uk/myNewsTumbling price will not stop
sale to Liontrust, says Majedie
Patrick Hosking Financial EditorMajedie Asset Management is pressing on
with a plan to sell itself to Liontrust Asset
Management in spite of a £43.4 million
reduction in the price being offered by its
larger rival.
The deal is being structured mostly in
Liontrust shares, which have almost
halved since the offer was announced in
December, sharply reducing its value.
Majedie’s owners include Majedie
Investments, an independent investment
trust with its own board that owns 17.6 per
cent of the firm.
Liontrust shares have slumped in recent
months, in part because of the rotation by
investors away from shares favoured by
managers such as Liontrust — which have
a focus on environmental, social and
corporate governance issues, or ESG — to
energy companies and miners. It also has
been forced to suspend a Russia-focused
fund that it runs, further damaging senti-
ment.
Majedie’s owners, including its senior
management, agreed to sell the business in
a £120 million deal that included 4.465 mil-
lion Liontrust shares then worth £97 mil-
lion. At Friday’s close those shares were
valued at £53.6 million. The deal, which in-
cluded a cash element of up to £23 million,mostly deferred and subject to future tar-
gets, was based on a Liontrust share price
of £21.72. The price closed yesterday at
£12.04, up 28p, or 2.4 per cent.
A spokesman for Majedie said: “The
strategic rationale for the deal with Lion-
trust is compelling and we continue to be
very excited about the potential of the
combined entity.” Liontrust said that the
deal was still on track to be completed in
April on the same terms as agreed in
December.
Regulatory approvals for the deal are
understood to have been received. The
completion date has been set for April 1.
Majedie and Liontrust both declined to
comment on whether it would have been
possible to renegotiate terms.
Majedie Investments was due to receive
actual and deferred Liontrust shares
worth up to £17.1 million at the time the
deal was announced. As of Friday’s close,
they would now be worth up to £9.4 mil-
lion. It was approached for comment.
Majedie, which is privately owned, runs
assets worth £5.8 billion and in 2020 won
the mandate to run the £1.2 billion
Edinburgh Investment Trust.
Liontrust, a FTSE 250 member, has
boomed to assets of £36.5 billion through
the popularity of its ESG funds and
through acquisition.Rio bid to own
Rio Tinto has made a $2.7 billion offer to
take majority ownership of its giant copper
mining project in Mongolia.
The Anglo-Australian group said that it
had made the all-cash proposal to buy the
49 per cent share it does not already own
of Turquoise Hill Resources, the Canadian
company through which it holds its inter-
est in the Oyu Tolgoi project.
The proposed deal would increase Rio’s
overall interest in Oyu Tolgoi to 66 per
cent, from about a third at present, with
the government of Mongolia retaining its
34 per cent stake. Rio already operates the
mine, which lies about 340 miles from
Ulan Bator in the Gobi Desert.
Jakob Stausholm, Rio’s chief executive,
said that the proposed takeover would
“enable Rio Tinto to work directly with the
government of Mongolia to move the Oyu
Tolgoi project forward with a simpler and
more efficient ownership and governance
structure”.
The proposal comes less than two
months after Rio, Turquoise Hill and
Mongolia resolved disputes over the
project, allowing underground mining to
begin.
Rio Tinto is one of the world’s biggest
mining groups, deriving the lion’s share of
its $21 billion annual profits by mining iron
ore in Australia, although it also produces
other commodities, including copper and
aluminium. Oyu Tolgoi is Rio’s most
important growth project as it seeks to
diversify its portfolio and increase its
exposure to metals that will be in demand
for the energy transition, such as copper,
which is used for electrical wiring.
The site in the Gobi Desert is already
home to a $6 billion open-pit mine. Rio is
working to tap far greater deposits of
copper and gold via a new underground
mine. By 2030 it is expected to rank as the
fourth biggest copper mine globally.
The project has been beset by delays and
disputes between Rio, Turquoise Hill and
the Mongolian government and costs have
risen to $6.9 billion, from $5.3 billion when
it was signed-off in 2016.
Rio owns 51 per cent of Turquoise Hill
Resources, which in turn owns 66 per cent
of Oyu Tolgoi. The two companies haveBusiness
Emily Gosdenclashed over how to finance the project
and its cost overruns and Rio has been
strongly criticised by some of Turquoise
Hill’s other shareholders.
Under the deal agreed in January for
underground mining to begin, Turquoise
Hill waived $2.4 billion of loans owed by
Mongolia. Turquoise Hill was due to con-
duct an equity-raising of up to $1.5 billion
to fund the continuing development work.
Rio said that its proposal “provides
Turquoise Hill minority shareholders with
the ability to realise compelling, imme-