BHP Considers Not Raising Bid for Rio Tinto: Report

Associated Press
Sunday, 30 Dec 2007 | 8:27 PM ET

BHP Billiton is considering submitting an unchanged US$150 billion bid to Rio Tinto's shareholders ahead of the February 6 deadline set by the UK Takeover Panel for BHP to make a formal offer for Rio, the UK's Sunday Times reported at the weekend, without citing sources.

This is one of several options being considered by BHP, along with increasing the cash component of any bid, the newspaper said.


BHP has not made any decision and is expected to wait some weeks before it does, it said. On November 8, BHP made an informal proposal for Rio Tinto , offering three of its shares for every one Rio Tinto share. Rio has rejected the offer on the grounds it significantly undervalues the miner's assets and prospects.

On December 21, the Takeover Panel issued a "put up or shut up" deadline for BHP to announce a firm intention to make an offer for Rio.

If one is not forthcoming, the miner will be barred from mounting another bid for six months.

Last week, Rio Tinto Chairman Paul Skinner said in a letter to shareholders that was posted on the Australian Securities Exchange that the company's outlook was "exceptional" because of rising demand for resources from developing countries.

Rio Tinto
Rio Tinto

He said the bid from BHP Billiton was rejected "as it significantly undervalued Rio Tinto and its prospects."

Skinner pointed to Rio Tinto's potential in iron ore, copper and aluminum, saying the company was well positioned to "capture strong growth in demand in the developing economies, including China and India."

BHP Billiton accounts for around 15 percent of world iron ore sales, while Rio Tinto is responsible for 24 percent, which would put the combined company at 39 percent. Global steel makers fear the two companies operating as a single unit would have too much influence over raw materials prices.

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