Business

Wednesday December 12, 2007

Rio Tinto’s challenge to BHP



SYDNEY: Rio Tinto Ltd/Plc challenged BHP Billiton Ltd/Plc yesterday to make a formal bid to create a mega-mining house or walk away from what could be the second biggest takeover ever.

Rio said it asked Britain’s Takeover Panel to set a deadline under a “put up or shut up” rule by which BHP would have to formalise its approach, more than a month after BHP’s US$140bil 3-for-1 share proposal was made public.

In China, trading in the country’s biggest steelmaker, Baosteel, was suspended yesterday amid speculation that Chinese companies could become involved in a bid for Rio. Baoshan Iron and Steel Co has previously denied it was preparing a counter-bid.

A man pushing his bicycle past a Baosteel billboard in Beijing. Trading in Baosteel was suspended amid speculation that Chinese companies could get involved in a bid for Rio. - AFP
Investment group Blackstone on Monday denied a British newspaper report it was planning a counter-bid for Rio with a consortium believed to include China’s sovereign wealth fund.

“The (BHP) proposal is getting a bit stale,” said James Wilson, a mining analyst with DJ Carmichael in Perth. “A marriage between Rio and BHP is the logical next step, and Rio is saying ‘come on BHP, get on with it, stop dilly dallying’.”

The proposal has eclipsed Rio’s US$38bil acquisition of Canadian aluminium giant Alcan, prompted widespread speculation of looming counter bids and triggered protests from the world’s steelmakers fearing a combined group would have too much clout in setting raw materials prices.

A combined BHPRio would hold about 27% of the world market for iron ore. It would also control the global flow of coal, copper, uranium and diamonds. – Reuters

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