BHP Billiton is unlikely to increase its $130 billion unsolicited proposal to acquire mining rival Rio Tinto by a Feb. 6 deadline, The Wall Street Journal reported on Monday.
BHP could be trying to pressure Rio to negotiate by holding firm with its three-for-one share offer, which has yet to be formalized, the newspaper said, citing sources familiar with the company's plans.
But with stock prices for both companies spiraling down in step with a general rout across equities markets, such a strategy could backfire, analysts said.
BHP's Australian shares tumbled nearly 6 percent on Tuesday, while Rio was down more than 10 percent, outpacing losses of about 6 percent in Australia's S&P/ASX 200 Index.
After Rio's sharp slide, DJ Carmichael & Co mining analyst James Wilson said BHP could be seen as taking an opportunistic line if they opt to proceed with their original proposal.
Speculation had swirled on Friday that BHP was readying a sweetened offer of 3.58 of its shares, plus A$16.50. BHP has refused to comment on the Wall Street Journal report or on market speculation.
"If they made (that offer) shareholders would probably jump at it at the moment," said Wilson. "But at the current proposal price, no way. It will be seen as BHP just being opportunistic because the Rio stock is cheap right now," he added.
Rio has tumbled from a peak of A$146.90 on Dec. 3 to as low as A$103.20 Tuesday
On Sunday, Rio Tinto Chief Executive Tom Albanese left the door open to a sweetened takeover offer from BHP Billiton but said Rio would be happy to grow on its own if BHP walked away.
The world's biggest miner, BHP, must make a formal offer by Feb. 6 or leave Rio alone for at least six months under a deadline imposed by Britain's Takeover Panel.
The mining industry has seen a crush of merger activity in recent months.
The latest development came on Monday when Brazilian mining giant Vale said it was in talks to acquire Anglo-Swiss rival Xstrata. The deal could top $100 billion, analysts said.
Vale, the world's largest iron ore producer, saidlaunching what would be the largest takeover ever by a Brazilian company, depended on market conditions.