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By staff writers
NEWS.com.au
June 05, 2009 02:41pm

MINING giant BHP Billiton may launch a new takeover bid for rival Rio Tinto, after the two announced a $US10 billion ($12.47 million) joint venture and the death of the Rio Tinto- Chinalco deal.

“We obviously can’t rule in or rule out anything,” BHP Billiton chief executive Marius Kloppers said.

“As a result of our previous bid for Rio, there are a number of conditions that I can point at and those obviously still remain.”

Mr Kloppers pointed to the more than $US10 billion savings the two companies say they seek from the WA joint venture, which “were such an important part of our original desire to put these two companies together”.

BHP Billiton’s hostile bid for Rio fell through last year amid concerns over Rio’s debt burden resulting from its 2007 acquisition of Canadian aluminium giant Alcan.

BHP Billiton cannot make a fresh bid for Rio until November 25 this year – 12 months after its last bid collapsed – under the UK’s Takeover Code rules.

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Dave of Perth Reports from the UK in February said top institutional investors had urged BHP Billiton to relaunch a takeover bid for Rio Tinto to scupper its now abandoned deal with Chinalco.

Chinalco-Rio Tinto deal dead

Overnight, Rio Tinto walked away from what would have been the biggest deal in Australian corporate history, its $US19.5 billion ($24.4 billion) alliance with Chinalco.

Rio Tinto chairman Jan du Plessis said in a letter to shareholders the planned deal with Chinalco was now dead and his company would pay it a $US195 million ($243.2 million) break fee.

“The transaction announced and recommended by the boards will now no longer be pursued,” Mr du Plessis said.

In a statement, Chinalco president Xiong Weiping said he regretted the deal was off.

“In recent weeks Chinalco has worked hard to respond constructively and engage with Rio Tinto to make appropriate amendments to the transaction terms … to better reflect the changed market background and feedback from shareholders and regulators.

Rights offer

Rio Tinto, saddled with about $US38.7 billion in debt, had been pursuing a tie-up with Chinalco.

With the deal off, Rio Tinto will seek to raise $US15.2 billion in a rights issue, which shareholders in Rio Tinto and its London-based Rio Tinto Plc can take part in.

Shareholders will be offered 21 new shares for every 40 shares held at $28.29 or 1400 pence each.

Rivals to team up

With the Chinalco deal off, BHP Billiton and Rio Tinto announced a 50/50 joint venture, combining all their iron ore assets in Western Australia. It is expected to save them $US10 billion.

The joint venture deal is likely to annoy Chinese steel producers, which have long believed the big Australian iron ore producers hold too much power to decide iron ore prices.

BHP Billiton is the world’s biggest mining company and Rio Tinto is the third largest.

“I am delighted that we are able to announce a transaction that can deliver significant real and quantifiable synergies to our shareholders,” BHP Billiton chairman Don Argus said.

By midday, BHP soared $2.83, or 8.06 per cent, to $37.94, while Rio advanced $6.60, or 9.87 per cent, to $73.50.

http://www.news.com.au/business/story/0,27753,25590805-462,00.html?referrer=email&source=eDM_newspulse

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