Waiting games

6 February 2008 By John Foley Follow @johnsfoley

The UK miner has wisely rebuffed BHP Billiton’s raised $150bn offer. The battle still has months to go, and there s much uncertainty over how China will play its hand. Rio can probably extract more.

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BHP Billiton made a firm allshare offer for Rio Tinto, valuing the AngloAustralian miner at $150bn. BHP offered 3.4 BHP shares for each Rio share, compared with its initial approach last November of three shares for one. Rio's board rejected the offer on Wednesday afternoon.

The offer would be conditional upon receiving antitrust approval in Europe, the US, Australia, Canada and South Africa, which BHP said it expected to receive in the second half of the year. BHP also said it would settle for accepting 50% of both Rio's UK and Australian shares.

Shining Prospect, an investment vehicle formed by Chinese stateowned miner Chinalco and Alcoa of the US, bought a 9% stake in Rio on Friday, and said it would monitor the situation closely. BHP had not been able to speak with Chinalco directly before raising its offer, according to people familiar with the situation.

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