Turquoise Hill Resources (TRQ), mcap=$5.8bn, price $28.83 vs $28.13

Pitch: Merger arb with the expectation of revised higher bid. Majority owner of a copper mine in Mongolia that is operated by RIO and is about ready to start production – one of the largest and most productive copper mines in the world. Rio Tinto wants this asset badly and offered to buy out TRQ at $26.68. Multiple activists agitate for a higher price and shares trade at 5% premium to the current offer.

Valuation: Revised offer from RIO expected in the $33-35 range with an 80% probability of the happening. Downside protected at $26.68. Risking $1.5/share to make $5-7/share.

Exp. gain: 17-25% to $33-35/share

Full TRQ write-up (free guest account required):

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