7 February 2008
BHP Billiton launches bid for Rio Tinto
As the mining industry digs deeper into the world of consolidation, BHP Billiton upped its takeover bid to $147.4 billion for Rio Tinto.
Rio Tinto initially rejected a bid from BHP Billiton saying it was too low. However, Rio Tinto officials said they would consider the latest offer.
BHP Billiton is the world’s top mining company, and Rio Tinto is the third largest.
While this deal has huge possibilities, steelmakers in China, Japan, and Europe have protested the pact saying a takeover would give it too much influence over global iron ore supplies and pricing.
The deal would be subject to regulatory approvals in Australia, the U.S., Europe, and elsewhere, and to 50% shareholder approval, said BHP Billiton Chief Executive Marius Kloppers.
This deal could deliver benefits worth $3.7 billion a year.
“I believe there is widespread support for the compelling logic of the proposal to combine the companies,” Kloppers said.
Rio Tinto Chairman Paul Skinner said the company would carefully consider BHP Billiton’s latest offer, and he asked shareholders not to take any action yet. “The boards of Rio Tinto will consider the terms of the proposal carefully in the light of all circumstances and will make a further statement once they have completed this assessment,” Skinner said. “In the meantime, the boards encourage shareholders not to take any action.”
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