Market Updates
Rio Tinto Rejects BHP
123jump.com Staff
06 Feb, 2008
New York City
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Rio Tinto rejected the revised offer from BHP which valued the company at $147 billion from earlier offer of $127 billion. BHP raised its ofer to 3.4 BHP stock for one stock of Rio Tinto on the last day to meet the UK regulatory requirements for takeover. Rio cited in the statement that the ofer fails to value its underlying assets adequately. BHP may revise the offer again. Separately BHP reported declining earnings on rising operating costs.
[R]1:00PM New York – Rio Tinto rejects revised offer from BHP as inadequate.[/R]
Rio Tinto ((RTP)) board rejected a revised offer from BHP Billiton after saying that it significantly undervalues the underlying assets.
The revised offer from BHP Billiton values Rio Tinto at $147 billion and it offered to exchange 3.4 stocks of BHP for 1 stock of Rio Tinto. The offer, though revised 15% higher, failed to convince management and board to take action.
The BHP ((BHP)) takeover attempt of Rio Tinto was complicated after Chinalco and Alcoa together acquired 9% stake of the whole company and 12% in the London listed stock. Chinalco and Alcoa are significant customers of iron ore and other minerals mined by Rio. If BHP and Rio merge, customers like Alcoa and Chinalco may face higher prices and a significant dependency on one company for its raw materials.
BHP revised its offer today to meet takeover regulation in the UK.BHP may be forced to revise its offer again or carry out a hostile offer directly to its shareholders.
In New York trading Rio Tinto fell 2% or $9 to $411.76 and BHP fell 4% or $2.83 to close at $66.60.
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