Rio Tinto rejects BHP Billiton offer
After months of speculation, BHP Billiton - the world's largest mining company - launched a takeover bid for Rio Tinto - the world's third largest miner. However, Rio Tinto rejected the bid saying it was too low.
BHP Billiton proposed offering three of its shares for every one Rio Tinto share - amounting to about $140 billion at current prices. In a statement, Rio Tinto said: "The boards of Rio Tinto have given the proposal careful consideration and concluded that it significantly undervalues Rio Tinto and its prospects. Accordingly, the boards have unanimously rejected the proposal as not being in the best interests of shareholders."
BHP Billiton said it "intends to continue to seek an opportunity to meet and discuss its proposal with Rio Tinto." It added, "There can be no assurance that any transaction or offer will result from BHP Billiton's proposal."
Rio Tinto completed its $39.1 billion acquisition of Canadian aluminium group Alcan yesterday. In addition, the company has announced that it has decided to explore options for the sale of some or all of Rio Tinto Energy America. Rio Tinto Energy America is the second largest US coal producer by tonnage.
A merger between BHP Billiton and Rio Tinto would create a $360 billion company involved in a range of industrial-use commodities, including copper, aluminium, iron ore, coal and uranium.
BHP Billiton owns the Olympic Dam project in South Australia, where uranium is produced as a by-product of copper production. Rio Tinto has interests in two uranium mines: Energy Resources of Australia Ltd (ERA) in Australia (68% interest) and Rossing in Namibia (69% interest).
In 2006, Rio Tinto produced 7094 tonnes of uranium, accounting for 18% of total world production. BHP Billiton produced 2868 tonnes, which represented 7% of world output.
Further information
WNA's Uranium Mining information paper
WNN: Rio Tinto to enter sustainable index
