Mining giant BHP Billiton formally launched a hostile bid for rival Rio Tinto today in a deal worth around $147.4bn (€100.7bn).
Australia-based BHP is offering 3.4 of its shares for every one Rio Tinto share, an increase from the initial informal proposal of three-for-one.
If the deal succeeds it would be the biggest takeover in the sector and create a mining giant controlling huge iron ore, copper and aluminium deposits. It would also result in one of the world’s biggest companies.
BHP, which has a market capitalisation of around €61.4bn, unveiled its terms on the deadline day for a bid announcement set by the UK’s Takeover Panel.
Rio rebuffed an initial approach last year saying BHP’s three-for-one share offer undervalued its business. The firm is headquartered in the UK and listed on the London and Australian stock exchanges.
BHP’s chief executive Officer Marius Kloppers said the deal would be subject to regulatory approvals in Australia, the US, Europe and elsewhere, and to 50% shareholder approval.
He said the proposed merger would deliver efficiency benefits worth $3.7bn (€2.52bn) a year and raise the value of shareholdings in both companies.
“I believe there is widespread support for the compelling logic of the proposal to combine the companies,” Mr Kloppers said in Sydney.
Rio Tinto chairman Paul Skinner said the company would carefully consider BHP Billiton’s latest offer, and asked shareholders not to take any action yet.
He said: “The boards of Rio Tinto will consider the terms of the proposal carefully in the light of all circumstances and will make a further statement once they have completed this assessment.
“In the meantime, the boards encourage shareholders not to take any action.”
BHP’s bid comes after reported interest in Rio Tinto from the Chinese firm Chinalco and United States company Alcoa, which jointly launched a dawn raid on Rio’s shares last Friday.
They were said to be considering increasing their stake in the Anglo-Australian miner or even launching a full bid, Sunday newspapers reported.
The Chinese are thought to be concerned that a tie-up between Rio and BHP would create a monopoly in iron ore, which China, as the world’s largest steel producer, is heavily reliant on.