It is reported that BHP Billiton has been advised it will be extremely difficult to launch a hostile takeover bid for rival Rio Tinto because of a poison pill in Rio's constitution. As per industry experts, BHP, which is likely to come back with a higher bid, after rejection of its initial offer by Rio Tinto, will find it extremely difficult to make a hostile bid due to complicated shape of Rio's corporate structure.

As per report, Rio's dual listed Australian and British components are particularly difficult to attack, as its constitution provides that unless a predator makes an all cash offer and BHP's current offer is structured as an all share deal a bidder needs to win 50% of both Rio's UK corporate and its Australian corporate and offer shares acceptable in both jurisdictions. For historical reasons between 30% and 37% of the Australian company is controlled by the British plc, making it even harder to take control.

The report cited sources close to Rio as saying that the company's structure and corporate constitution make it more difficult for anyone to launch a hostile bid, but they insist it falls short of acting as a poison pill. A source said "The terms of that are really restrictive it's not just that you have to do an all cash offer.”