The board of BHP Billiton has recently written to the board of Rio Tinto proposing a combination of their respective companies to create an organization without peer in the natural resources industry. The board of BHP Billiton has sought and continues to seek to engage in discussions with Rio Tinto with a view to obtaining the support and recommendation of the board of Rio Tinto for this proposal. To date Rio Tinto has not agreed to these discussions.

BHPB in a release said that “BHP Billiton now considers it appropriate to make BHP Billiton and Rio Tinto shareholders are aware of this proposal so that it can seek their support for discussions between the two companies. The highlights of the proposal are
1. Combination to create the world’s premier diversified natural resources company
2. Unique portfolio of large scale, low cost, long life assets
3. USD 3.7 billion per annum in quantified synergies achieved through efficiencies and acceleration of volumes to meet strong customer demand
4. Three BHP Billiton shares for each Rio Tinto share equivalent to a premium of approximately 28% for Rio Tinto shareholders
5. All share proposals gives Rio Tinto shareholders exposure to the world’s premier diversified natural resources company
6. Value enhancing for BHP Billiton shareholders with exposure to synergies captured, strengthened asset portfolio and unrivalled future growth pipeline
7. USD 30 billion post completion buy back intended
8. Cash flow and earnings per share accretive from the first full fiscal year following completion.