In a recent vote, shareholders in Rio Tinto PLC overwhelmingly rejected a proposal to abandon the company’s dual London listing, opting instead to maintain its current structure. The move to drop the listing was proposed by activist investor Palliser Capital, which holds a USD300 million stake in the mining giant.
Majority of the shareholders, over 80%, voted against the initiative, which suggested focusing entirely on the Australian market. One of the arguments for maintaining the dual-listed company structure was the potential tax implications, as Rio Tinto highlighted that unification could result in costs in the mid-single digit billions of US dollars.
Palliser Capital had drawn parallels to rival mining company BHP, which shifted its primary listing to Sydney in 2022, a move they encouraged Rio Tinto to emulate. However, Rio Tinto emphasized that the unification would not serve the shareholders’ best interests at this time.
The proposed change also had implications for the London market. If approved, it would have added pressure on London following similar moves by BHP and potential considerations by Glencore PLC.
The voting outcome also reflects the strong presence of UK investors, who hold approximately 77% of the UK-listed stock in Rio Tinto, despite the fact that a significant amount of the company’s revenue is derived from its operations in Australia.
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Rio Tinto shares (ASX: RIO) have responded today with a 0.66% increase in Australia, yet remain down on a YTD basis (-1.31%).
In conclusion, the decision by Rio Tinto shareholders to reject the proposal underscores their commitment to maintaining the company’s current market structure, while considering the potential financial implications of such a significant change.
