MercoPress, en Español

Montevideo, March 28th 2024 - 23:14 UTC

 

 

Billinton insists with Rio Tinto and making giant company

Thursday, November 29th 2007 - 20:00 UTC
Full article
 BHP CEO Marius Kloppers BHP CEO Marius Kloppers

Resources giant BHP Billiton said Wednesday it still hoped rival Rio Tinto would warm to its uninvited takeover bid, despite opposition from customers who fear it will lead to a stranglehold on prices.

BHP chief executive Marius Kloppers told the firm's annual meeting in Adelaide, Australia that its executives had been arguing the "irresistible logic" of the tie-up with customers and investors around the world for two weeks. "The bottom line here is simple -- these two companies are worth more together than apart," he told shareholders. "It is not a question of us needing them or them needing us. This is about unlocking value for both sets of shareholders that neither company can access on its own." Rio Tinto has rebuffed BHP's proposal to combine the world's third biggest and largest miners respectively, which would create a 350 billion US dollar conglomerate, saying it did not reflect the group's real value. But Kloppers said many had already warmed to the proposal. "Many already see the logic of our proposal and the benefits of more produce to market, more quickly". "We remain hopeful that Rio Tinto will engage with us on this important proposal which is about creating additional value for shareholders of both companies." BHP's offer of three shares for each Rio Tinto share values the latter at about 124 billion US dollars. BHP says a merged company would unlock at least 3.7 billion Australian dollars in shareholder value, for instance through cost savings. It would also provide clients more products at greater speed through the faster development of resources and the unblocking of supply lines. But Rio Tinto chief executive Tom Albanese this week told investors that his company's potential growth "dwarfs what BHP Billiton has asserted to be acquisition synergies." "While BHP may need Rio, Rio does not need BHP," Albanese said. Opposition has emerged from steel mills and lobby groups in Europe and Asia. In an unusual move, a Chinese government spokesman has joined the critics. "The combining of two companies is supposed to be a business activity, so we don't normally pay close attention to it," spokesman Qin Gang told the Australian Broadcasting Corporation in a report from Beijing. "But what we care about is the issue of price in the international resources market. We want the marketing price of international resources to reflect supply and demand market rule. The price should be long-lasting, stable and beneficial to everybody, not just exporting countries." China is one of the largest buyers of Australian iron ore, which is vital to the huge Chinese manufacturing sector. Rumors of a Chinese counter bid to BHP's offer were denied earlier this week. BHP and Rio already operate several joint ventures around the world, including the Escondida copper mine in northern Chile. BHP is interested in Rio's Western Australian iron ore mines because it also has iron ore projects in the Pilbara region and believes merging the operations could provide rail and port infrastructure advantages and other benefits.

Categories: Energy & Oil, International.

Top Comments

Disclaimer & comment rules

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!