BHP Billiton makes rejected offer for Rio Tinto

By Lisa Kerner

Charlotte, N.C., Feb. 6 - BHP Billiton Ltd. offered to acquire all of the shares of Rio Tinto Ltd. and Rio Tinto plc to create "the world's premier diversified natural resources company."

Rio Tinto shareholders would receive 3.4 BHP Billiton shares for each Rio Tinto share, according to a BHP Billiton news release.

BHP Billiton said benefits of the business combination to Rio Tinto shareholders include:

• Greater volumes and production efficiencies through unparalleled exposure to the same key mineral basins;

• Creation of substantial value through quantified synergies;

• Efficient development of the next generation of large-scale projects in new regions; and

• A world-class management and operational team with strength and depth.

BHP Billiton shareholders would own some 56% of the combined company.

Despite the benefits listed by BHP, the boards of Rio Tinto rejected the pre-conditional offer saying it significantly undervalues Rio Tinto.

"BHP Billiton's offers, while improved, still fail to recognize the underlying value of Rio Tinto's quality assets and prospects," Rio Tinto chairman Paul Skinner said in a statement released on Wednesday.

"Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto."

Skinner said Rio Tinto will forge ahead with its "strategy of operating and developing large scale, long life, low-cost assets to generate significant value for shareholders."

Rio Tinto has standalone growth opportunities, particularly in iron ore, copper and aluminum, and is well positioned to take advantage of strong global markets, chief executive officer Tom Albanese added.

Rio Tinto is a mining group based in London.

Melbourne, Australia-based BHP Billiton engages in the extraction and processing of minerals, oil and gas primarily in Australia, Latin America and southern Africa.

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