“While the offer provides an escape from the immediate downside, certainty of value today comes at a cost that is too high to be tolerated,” ISS said, adding that the severity of the downside risk is outweighed by the magnitude of the discount to net asset value implied by the offer. “As such, support for this offer is not warranted.”
ISS’s position is contrary to Wednesday’s recommendation by another advisory firm, Glass Lewis & Co., which urged shareholders of the Canadian miner to support Rio’s proposal. Two top shareholders — Pentwater Capital Management and SailingStone Capital Partners — have come out against the deal, arguing it undervalues the company.
At stake is Rio Tinto’s control of Mongolia’s Oyu Tolgoi project, which is expected to become the world’s fourth-largest copper mine. Rio already owns 51% of Turquoise Hill, but more than half of the remaining shareholders must back the acquisition…
