HomeBase MetalsAustralian approval for BHP Billiton takeover bid

Australian approval for BHP Billiton takeover bid

Marius Kloppers,
Chief Executive,
Melbourne, Australia — MININGREVIEW.COM — 02 October 2008 – BHP Billiton Limited has won approval from Australia’s competition regulator for its hostile US$101 billion (R800 billion) all-share bid for Rio Tinto Group, boosting speculation that the world’s largest mining takeover may succeed.

Making this announcement here today, the Australian Competition and Consumer Commission (ACCC) said the proposed acquisition would not be likely to substantially lessen competition in any relevant market.” Bloomberg News reports that the watchdog body did not request asset sales or undertakings from BHP should it succeed in taking over its rival.

Asian and European steelmakers oppose the combination that would control more than a third of global ore, saying it would give BHP too much influence over prices. Rio’s Australian shares surged as much 17% after the commission’s statement.

If the take-over is successful, the combined companies would vie with Brazil’s Cia. Vale do Rio Doce as the world’s largest supplier of the raw material used to make steel.

BHP welcomed today’s decision, the Melbourne-based company said in a statement to the securities exchange.

“The merged firm would be unlikely to limit its supply of iron ore, given the uncertainty it would face in relation to the profitability in this strategy,” said ACCC chairman Graeme Samuel in today’s statement.

Rio – the world’s second-largest iron-ore producer – rejected BHP’s sweetened, all-share offer in February, saying it had significantly undervalued the company and its growth prospects.

BHP CEO Marius Kloppers – who’s borrowing a record US$55 billion (R440 billion) to pay for the deal – subsequently increased his offer from a 3-for-1 proposal to 3.4 shares for every Rio share.