BHP Billiton makes final offer for Rio Tinto
New bid valued at $147.4 billion
By Maria Varmazis -- Purchasing, 2/6/2008 11:57:00 AM
Just meeting today’s deadline, London-based mining giant BHP Billiton made one last final detailed attempt (PDF) at buying a smaller rival, Melbourne-based Rio Tinto, at $147.4 billion; however, just a few hours later, Rio Tinto’s executive board unanimously rejected the offer, saying that the new price still undervalues the company. BHP’s new bid was slightly more than BHP’s first offer of $130 billion.
As reported on Purchasing.com earlier, a Rio Tinto acceptance of BHP’s acquisition bid would make the merged company a huge player in the global iron ore market, making it a formidable supply and pricing rival for the world’s current top supplier, Vale of Brazil. The combined company would also become the top supplier of aluminum and copper.
BHP Billiton’s offer is still pending regulatory approval as well as 50% shareholder approval, but Rio’s chairman Paul Skinner says: “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, BHP Billiton hasn’t ruled out revising its bid offer in a follow-up.
Reuters reports that some analysts doubt the sweetened bid would be enough to win Rio and create the world's third-richest company, ranked behind only Exxon Mobil and General Electric. “It's a lot fairer than the offer we've had before, (but) it's by no means a knock-out offer,” says Bertie Thomson, a fund manager at Aberdeen Asset Management, who holds both Rio and BHP shares.
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