Activist Renews Calls For Listing Unification As Rio Tinto Abandons $5 Billion Equity Offering

Activist investor Palliser Capital has renewed its call for Rio Tinto RIO to unify its dual-listed corporate structure, urging the miner to abandon its London listing in favor of an Australian one.

Reuters reported that the London-based hedge fund sent a letter to Rio Tinto’s chairman highlighting the report by Grant Thornton Australia. This report clarified that the company’s dual-listed structure (DLC) limits its ability to pursue stock-based mergers and acquisitions, complicates equity capital raising and creates a share price disparity between its UK and Australian listings.

Palliser, which holds a $300 million stake in Rio Tinto, argues that the structure is inefficient and “value destructive,” preventing the company from realizing its full potential. Meanwhile, their larger rival, BHP Group, successfully unified its dual-listed structure in 2022. If Rio Tinto follows that advice, it would be another hit for the London Stock Exchange (LSE), which has lost nearly a third of its listings since 2015.

Rio Tinto has operated under its current structure since 1995, maintaining separate entities in the UK and Australia. The company's shares trade on the LSE and the Australian Securities Exchange, with shareholder voting rights and dividends structured to ensure parity. Furthermore, the structure requires the company to hold two annual general meetings, in London and Perth.

Rio Tinto has defended the DLC despite its complexity, stating that it benefits shareholders and supports the group's returns. The company thoroughly reviewed the structure in 2024, concluding that it remains effective. Furthermore, the management pointed at a strong dividend track record, as the firm remained among the top UK dividend payers.

The matter will be decided at Rio Tinto’s upcoming annual general meetings, with UK-listed shareholders voting on April 3 and Australian-listed shareholders voting on May 1. So far, Palliser has reportedly rallied more than 100 shareholders to support their effort.

The capital markets might be the catalyst for resolving the standoff between management and an activist investor. In the aftermath of a $6.7 billion acquisition of Arcadium Lithium, which closed last week, Rio Tinto had floated the idea of a share sale up to $5 billion.

Still, management scrapped the idea following significant investor pushback, opting to fortify the financial position through an existing bridge loan facility.

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