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BHP sweetening its initial three to one share-swap bid; raising its formal offer to 3.4 BHP shares for every Rio share.
The offer comes less than a day before the deadline for a formal offer was due to expire, and has been met with caution by Rio Tinto. Rio’s board rejected BHP’s initial offer as too low.
Rio Tinto’s Chairman Paul Skinner said today:
“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. In the meantime, the boards encourage shareholders not to take any action.”
BHP Billiton’s chief executive Marius Kloppers told a briefing today that he had had no talks with the Rio board but that he believed the offer had widespread support.
BHP’s task was complicated last week when Aluminium Corporation of China - Chinalco - teamed with Alcoa to buy a 12 per cent stake in Rio. The move was thought to signify China’s resistance to the merger of the two Australian mining giants.
However Mr Kloppers today told reporters that the takeover could proceed even without the support of Chinalco and Alcoa.
Back in November BHP Billiton also offered an additional lure to Rio shareholders, pledging a $US30 billion share buyback within one year of completing the acquisition.
The formal offer has drawn muted reactions from analysts.
Rob Patterson of Argo Investments said: “I think the result may be seen as a bit disappointing but the offer should be enough to get BHP talking to Rio. We think to raise the offer to that degree makes sense.”
Tim Barker of BT Investment Management said: “It’s a bit lower that the market would have liked to have seen in the situation they’re in.”
John Veldhuizen, a resources analyst at BBY, said the offer could not be brushed aside by Rio.
"It's on the table, they'll consider it, probably say it's unfair - as any corporate would," he said. "But to not look at all the long-term benefits this could achieve would be naive."
Also today BHP posted record half-year results on its iron ore, petroleum and manganese businesses but said its first-half net profit fell 2.4 per cent on last year to $US6.017 billion.
The offer comes less than a day before the deadline for a formal offer was due to expire, and has been met with caution by Rio Tinto. Rio’s board rejected BHP’s initial offer as too low.
Rio Tinto’s Chairman Paul Skinner said today:
“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. In the meantime, the boards encourage shareholders not to take any action.”
BHP Billiton’s chief executive Marius Kloppers told a briefing today that he had had no talks with the Rio board but that he believed the offer had widespread support.
BHP’s task was complicated last week when Aluminium Corporation of China - Chinalco - teamed with Alcoa to buy a 12 per cent stake in Rio. The move was thought to signify China’s resistance to the merger of the two Australian mining giants.
However Mr Kloppers today told reporters that the takeover could proceed even without the support of Chinalco and Alcoa.
Back in November BHP Billiton also offered an additional lure to Rio shareholders, pledging a $US30 billion share buyback within one year of completing the acquisition.
The formal offer has drawn muted reactions from analysts.
Rob Patterson of Argo Investments said: “I think the result may be seen as a bit disappointing but the offer should be enough to get BHP talking to Rio. We think to raise the offer to that degree makes sense.”
Tim Barker of BT Investment Management said: “It’s a bit lower that the market would have liked to have seen in the situation they’re in.”
John Veldhuizen, a resources analyst at BBY, said the offer could not be brushed aside by Rio.
"It's on the table, they'll consider it, probably say it's unfair - as any corporate would," he said. "But to not look at all the long-term benefits this could achieve would be naive."
Also today BHP posted record half-year results on its iron ore, petroleum and manganese businesses but said its first-half net profit fell 2.4 per cent on last year to $US6.017 billion.
