BHP Billiton makes $147 billion move for Rio Tinto

Source: Energy Digital

Date :2/6/2008 7:09:03 AM

BHP has made its first move in what may well be a protracted takeover attempt with a $147 billion bid for rival Rio, a move that could create the world's third-biggest corporation.

If the deal goes through, the combined company would be behind only Exxon Mobil and General Electric for the title of world's largest corporation by market capitalization.

BHP Billiton today said it was prepared to exchange 3.4 of its shares for each Rio Tinto stock, an improvement on the previous three-for-one offer that Rio rejected as inadequate.

Profit drop

The increased offer overshadowed a separate BHP Billiton announcement that its net profit fell 2.4 percent in the six months to December, the first time in five years that the Anglo-Australian giant failed to grow profits.

Trading on both companies has been sluggish as investors refuse to commit on what many expect to be a long and drawn-out process. Much of the influence of the battle lies with China however, which is against the forming of a mining behemoth as it looks to dictate prices for raw materials as it looks to feed its booming construction industry.

China, via its sovereign wealth fund, has recently invested heavily in Rio Tinto with a view to disrupting the merger, as well as claiming a stake in Australian firm Fortescue.

February 6, 2008