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Last Updated: Tuesday, 5 February 2008, 23:33 GMT
BHP formalises Rio takeover offer
Rio Tinto plant in Australia
Rio has been resisting BHP plans for a takeover
Anglo-Australian mining giant BHP Billiton has formalised a hostile bid to buy its rival Rio Tinto in a deal worth about $147bn (74.8bn).

BHP has sweetened its original informal approach, offering 3.4 of its shares for every Rio Tinto share - better than the previous three-for-one proposal.

Rio had spurned the approach at that level, saying it undervalued the firm.

A tie-up would create a business with a third of the world's iron-ore market, but a deal could still face resistance.

Consider carefully

"The offer should be enough to get BHP talking to Rio," said Rob Patterson, managing director of fund manager Argo Investments.

This is our first and only offer
BHP chief executive Marius Kloppers

"We think to raise the offer to that degree probably makes sense."

Paul Skinner, chairman of Rio, which is also an Anglo-Australian business, said the company would "consider the terms of the proposal carefully".

He urged shareholders not to take any action until the firm had completed their assessment of BHP's offer.

"This is our first and only offer," said BHP chief executive Marius Kloppers.

Obstacles

Last week, Chinese mining firm Chinalco teamed up with US aluminium giant Alcoa to buy a 9% stake in Rio Tinto for $14.05bn.

Analysts said the move, the largest Chinese investment overseas, was an attempt to block BHP's efforts to take control of Rio.

Alcoa and Chinalco said at the time they did not intend to make an offer for the whole of Rio Tinto, but they said they reserved the right to do so if Rio received a firm bid from a third party.

A spokesman for Alcoa said it was now analysing BHP's bid, but declined to comment on the possibility of making a counter offer.

VIDEO AND AUDIO NEWS
BHP's CEO making the case for his takeover



SEE ALSO
BHP given Rio takeover deadline
21 Dec 07 |  Business
Rio calls for BHP bid time limit
11 Dec 07 |  Business
Rio boss says BHP bid 'too low'
02 Dec 07 |  Business
Rio fights to keep BHP bid at bay
26 Nov 07 |  Business
Steel firms oppose BHP-Rio deal
19 Nov 07 |  Business
BHP makes bid move for Rio Tinto
08 Nov 07 |  Business

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