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BHP formalises Rio takeover offer BHP formalises Rio takeover offer
(20 minutes later)
Anglo-Australian mining giant BHP Billiton has said it has formalised a takeover bid to buy its rival Rio Tinto in a deal worth about $147bn (£74.8bn). 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 sweetened its original bid approach, offering 3.4 of its shares for every Rio Tinto share - better than the previous three-for-one offer. 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 an offer at that level, saying it undervalued the firm. 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.A tie-up would create a business with a third of the world's iron-ore market, but a deal could still face resistance.
"The offer should be enough to get BHP talking to Rio," said Rob Patterson, managing director of fund manager Argo Investments."The offer should be enough to get BHP talking to Rio," said Rob Patterson, managing director of fund manager Argo Investments.
"We think to raise the offer to that degree probably makes sense.""We think to raise the offer to that degree probably makes sense."
Rio Tinto's chairman Paul Skinner said the company would "consider the terms of the proposal carefully".Rio Tinto's chairman Paul Skinner 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.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 executiveMarius Kloppers.
ObstaclesObstacles
Last week, Chinese mining firm Chinalco teamed up with US aluminium giant Alcoa to buy a 9% stake in Rio Tinto for $14.05bn.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.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.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.But they said they reserved the right to do so if Rio received a firm bid from a third party.