Rio Turns Cold Shoulder to Improved BHP Offer
February 07, 08 by Ronit Scheyer
After less than one day of consideration, the boards of Rio Tinto have rejected BHP Billiton’s pre-conditional takeover bid, saying that, while the offer is improved, it still significantly undervalues Rio Tinto and would therefore not be in the best interests of Rio Tinto shareholders. Under the terms of the proposal, 3.4 BHP Billiton’s shares would be exchanged for each Rio Tinto share.
Rio Tinto Chairman Paul Skinner commented, “BHP Billiton’s offers, while improved, still fails to recognize the underlying value of Rio Tinto’s quality assets and prospects. Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto.”
BHP Billiton announced an offer for Rio Tinto in November, which valued every Rio share for every three BHP shares. Rio rejected that offer for the same reason, saying it grossly undervalued the rival miner’s worth.
