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BHP formalises Rio takeover offer | BHP formalises Rio takeover offer |
(20 minutes later) | |
Anglo-Australian mining giant BHP Billiton has formalised a hostile bid to buy its rival Rio Tinto in a deal worth about $147bn (£74.8bn). | |
BHP has sweetened its original informal approach, offering 3.4 of its shares for every Rio Tinto share - better than the previous three-for-one proposal. | |
Rio had spurned the approach at that level, saying it undervalued the firm. | |
A tie-up would create a business with a third of the world's iron-ore market, but a deal could still face resistance. | A tie-up would create a business with a third of the world's iron-ore market, but a deal could still face resistance. |
"The offer should be enough to get BHP talking to Rio," said Rob Patterson, managing director of fund manager Argo Investments. | "The offer should be enough to get BHP talking to Rio," said Rob Patterson, managing director of fund manager Argo Investments. |
"We think to raise the offer to that degree probably makes sense." | "We think to raise the offer to that degree probably makes sense." |
Rio Tinto's chairman Paul Skinner said the company would "consider the terms of the proposal carefully". | Rio Tinto's chairman Paul Skinner said the company would "consider the terms of the proposal carefully". |
He urged shareholders not to take any action until the firm had completed their assessment of BHP's offer. | He urged shareholders not to take any action until the firm had completed their assessment of BHP's offer. |
"This is our first and only offer," said BHP chief executiveMarius Kloppers. | |
Obstacles | Obstacles |
Last week, Chinese mining firm Chinalco teamed up with US aluminium giant Alcoa to buy a 9% stake in Rio Tinto for $14.05bn. | Last week, Chinese mining firm Chinalco teamed up with US aluminium giant Alcoa to buy a 9% stake in Rio Tinto for $14.05bn. |
Analysts said the move, the largest Chinese investment overseas, was an attempt to block BHP's efforts to take control of Rio. | Analysts said the move, the largest Chinese investment overseas, was an attempt to block BHP's efforts to take control of Rio. |
Alcoa and Chinalco said at the time they did not intend to make an offer for the whole of Rio Tinto. | Alcoa and Chinalco said at the time they did not intend to make an offer for the whole of Rio Tinto. |
But they said they reserved the right to do so if Rio received a firm bid from a third party. | But they said they reserved the right to do so if Rio received a firm bid from a third party. |