Copper buy for Billiton

Billiton's buy gives it copper assets.

The UK-based mining group Billiton has rescued Canadian copper miner Rio Algom from a hostile takeover bid, agreeing to buy it for 1.7bn Canadian dollars ($1.2bn) in cash.

The offer works out at 27 Canadian dollars a share, representing a 49% premium to the closing price of Rio Algom shares on 21 August - the day before a hostile bid for the firm from Canada's Noranda was announced.

Rio Algom chairman Gordon Gray said he was happy with the Billiton deal.

"We believe this offer reflects the value we have worked hard to build for investors, whilst our employees will benefit from joining a global company with the size and resources needed to compete worldwide."

Earlier offer

Noranda had earlier offered 24.50 Canadian dollars a share for Rio Algom and said it would sell a 50% stake to Chile's state-owned Codelco on completion of the deal.

Toronto-based Rio Algom produced about 184,000 tonnes of copper in 1999 and had net earning of 30m Canadian dollars.

It has assets in Chile, Argentina, Peru, Canada and the US.

Its massive Antamina project in Peru is set to be the world's largest copper and zinc mine when it comes on stream next year.

Earnings dilution

Billiton chairman and chief executive Brian Gilbertson said: "The quality and potential of the Rio Algom assets represent, for Billiton, a unique entry vehicle into the global copper and metals market."

Billiton's existing business is focused on aluminium, nickel, ferrometals and coal.

It said the Rio Algom acquisition would modestly dilute earnings this year but should help lift profit when the Antamina project starts up in the second half of 2001.

Billiton shares fell in early trade in London on Friday.

At 0803 GMT, the stock stood at 299.25p, down 3.5%.