BHP Billiton calls off bid for Rio Tinto

by eyetee | December 1, 2008 12:00 am

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After 18 months and $450 million US, BHP Billiton says it is no longer pursuing its hostile takeover bid for Rio Tinto.

Blaming the spiraling global economy and declining commodity prices, BHP chair Don Argus said the decision to abandon the deal was made to protect shareholder value.

“We have said that we would only seek to complete the transaction if it was in the best interests of BHP Billiton’s shareholders,” he said in a statement.

“While we have not changed our view of the basic industrial logic of the combination, or of the longer term prospects for natural resource demand growth driven by emerging economies, we have concerns about the continued deterioration of near-term global economic conditions, the lack of any certainty as to the time it will take for conditions to improve, and the risks these issues imply for shareholder value.”

Once valued at $147 billion, the now $68-billion deal would have created a mining behemoth with interests in copper, aluminum, iron ore, and coal and put them ahead of Brazil’s Companhia Vale do Rio Doce, the world’s largest iron ore miner.

Earlier this year, BHP received clearance without remedies from the U.S. Department of Justice (DOJ) and the Australian Competition and Consumer Commission (ACCC). However, last month, the European Commission issued a ‘statement of objections’ that a merger of the number two and three mining companies would impede competition.

Now that the deal is off, BHP said it would have been prepared to offer remedies to the antitrust regulatory body. However, without doing so, the company now expects clearance will be withheld. If clearance occurs despite its lack of action, BHP said it would recommend its shareholders vote against accepting the transaction.

Rio Tinto owns 60 per cent of the Diavik mine and BHP owns the Ekati mine. Both are in the Northwest Territories.

BHP said it will write off the $450-million expenditure.

Source URL: https://www.jewellerybusiness.com/news/bhp-billiton-calls-off-bid-for-rio-tinto/

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