BHP Billiton makes formal proposal, Rio Tinto says no

Rio Tinto rejected a sweetened formal offer from mining rival BHP Billiton on Wednesday, saying the all-share offer worth $147.4 billion still did not reflect the value of the company and its prospects for expansion. Rio Tinto, which had already rejected an initial approach from BHP Billiton last year as too low, said its boards were unanimous in turning away an offer that would create the dominant global player in iron ore. “BHP Billiton’s offers, while improved, still fail to recognize the underlying value of Rio Tinto’s quality assets and prospects,” said Rio Tinto chairman Paul Skinner. “Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto.”

BHP Billiton is already the world’s largest diversified mining company, and Rio Tinto is the third-largest. Analysts say that if the deal succeeds it would be the biggest takeover in the mining sector and one of the biggest ever in the corporate world. Steelmakers in China, Japan and Europe have protested BHP Billiton’s bid, contending that a takeover would give it too much influence over global iron ore supplies and pricing.