Rio Tinto Plc · LSE:RIO
Rio Tinto — Merger or Acquisition (February 2009)
10 slides from Rio Tinto's merger presentation, Feb 12, 2009
Slide 1: Pioneering strategic partnership with Chinalco
Pioneering strategic partnership with Chinalco Joint venture bonds to deliver US$ casi to Rio Tinto. Gi. 12 February z00h £4 ‘\
Slide 2: Forward-Looking Statements
! This presentation, has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and consists of the slides for a presentation concerning Rio Tinto and Chinalco. By reviewing/attending this presentation you agree to be bound by the following conditions. Forward-Looking Statements This pre
Slide 3: Pioneering strategic partnership with Chinalco delivering US$19.5bn in cash
• Rio Tinto has agreed to enter into a pioneering strategic partnership with Chinalco delivering US$ 19.5bn in cash to Rio Tinto: – investments in aluminium (US$ 2.1bn), copper (US$ 4.5bn) and iron ore (US$ 5.2bn) joint ventures and project development opportunities (US$ 0.5bn) totalling US$ 12.3bn;
Slide 4: Rationale: demand for commodities and confidence in the Chinese economy
! !! " • Significant demand for commodities over the long run • Confidence in the resilience of the Chinese economy • Increasing importance of the Chinese market – accounts for 1/3 of global metal demand and 2/3 of global metal Confidence in Chinese demand growth economy and industry demand fundamen
Slide 5: Chinalco: products, geographies, management and growth
# ! • Commercially driven aluminium, copper and titanium product groups Products and • Interests in assets primarily in China and across a range of geographies Geographies including Australia, Peru and Saudi Arabia • Seeking diversification across products and regions in line with strategy of becomi
Slide 6: Strong performance and market position with aligned values and objectives
# Strong performance and market …with aligned values and position… objectives • Outstanding track record of growth • Governance structure which promotes across multiple sectors independent commercial decision making • Deep insight into Chinese trends and • Commitment to balance excellent returns dev
Slide 7: Realises premium value and eliminates short term financial uncertainty
# # • Joint venture asset consideration at a significant premium to current implied enterprise valuation metrics • Convertible bonds convert at attractive premia Realises premium – Tranche A: 107% premium to plc unaffected share price1 (68% to Ltd, respectively) value – Tranche B: 176% premium to pl
Slide 8: +124% premium to current market enterprise value
! ! ! ! $ Comparison of Chinalco’s share of H2 2008 attributable EBITDA1 with current market enterprise value2 18% +124% premium to current market enterprise 8% value5 Proportion of H2 2008 EBITDA Consideration as proportion of 4 represented by Chinalco current market enterprise value 3 investment 1
Slide 9: A comprehensive package of benefits
!! • A comprehensive package of benefits: – premium valuation of investment assets and highly attractive financing terms – strengthens Rio Tinto’s balance sheet – flexibility to undertake high value strategic growth at all points of the cycle – logical step to position Rio Tinto at the forefront of
Slide 10: Robust underlying performance in 2008
% # Robust underlying performance in 2008 • Underlying EBITDA of $22.3 billion, up 60% • Record underlying earnings of $10.3 billion, up 38% Impairment charge of $8.4 billion recognised, mainly relating to Alcan • Net earnings of $3.7 billion, down 50% Decisive measures already taken to position the