The board of BHP Billiton announced an offer for all of the shares in Rio Tinto Limited and Rio Tinto plc. As per announcement, BHP Billiton’s offer will deliver to Rio Tinto shareholders
1. 3.4 BHP Billiton shares for each Rio Tinto share
2. Approximately 44% of the Enlarged Group compared with approximately 36% based on the market capitalizations of the companies prior to the approach by BHP Billiton to Rio Tinto on 1 November 2007
3. A 45% premium to the Rio Tinto share price prior to the approach.
The Offers contain a minimum acceptance condition requiring acceptances relating to more than 50% of the publicly held shares in each of Rio Tinto Limited and Rio Tinto plc. BHP Billiton also proposes a buy back of up to USD 30 billion within one year of completing the Acquisition if its 3.4 for one offer is successful.
BHPB said that the combination of BHP Billiton and Rio Tinto will create the world’s premier diversified natural resources company with a unique opportunity to unlock value for shareholders
1. Unparalleled exposure to the same key mineral basins will create significant value by optimizing production efficiencies and delivering greater volumes on an accelerated basis to meet growing demand;
2. Creation of substantial value through quantified synergies and benefits which are expected to contribute a total incremental EBITDA of US$3.7 billion nominal per annum within seven years of completion of the Acquisition;
3. Efficient development of the next generation of large-scale projects in new regions for the benefit of its customers, the communities in which it operates, and its shareholders
4. A world class management and operational team with strength and depth across all levels of the organization with a commitment to the pursuit of excellence and the highest standards in safety and sustainability and a focus on global best practice in community and the environment.
Mr Don Argus chairman of BHP Billiton said "This combination of two industry leading companies provides a unique opportunity to create a truly unparalleled resources company. Whilst both BHP Billiton and Rio Tinto have proven strategies and excellent future growth prospects on a stand-alone basis, a combined entity would be able to unlock significant additional value for both sets of shareholders and be in an unparalleled position to capitalize on future opportunities. BHP Billiton and Rio Tinto already share many important characteristics such as an overriding commitment to safety, community and sustainability. We are firmly of the view that the terms of the offer announced today are compelling and reflect our absolute conviction in the strength of this combination which has convinced us to make this offer directly to Rio Tinto’s shareholders."
On November 8th 2007 BHP Billiton announced it had approached Rio Tinto on November 1st 2007 to propose combining the groups through two inter conditional schemes of arrangement. Extensive consultations with the shareholders and stakeholders of both Rio Tinto and BHP Billiton have indicated a clear understanding of the industrial logic of such a combination and assisted BHP Billiton in determining the terms of the Offers being made today to the shareholders of Rio Tinto. These terms represent compelling value for Rio Tinto shareholders and a substantial increase over the initial proposal made to the Board of Rio Tinto. Since November 1st 2007 BHP Billiton has continued to seek the support and recommendation of the Board of Rio Tinto. However, to date, Rio Tinto has refused to enter into discussions with BHP Billiton and, as a result, BHP Billiton now believes it is appropriate to make an offer directly to Rio Tinto shareholders and is today announcing the terms of its Offers which represent a significant improvement to the terms of the proposal made to the Board of Rio Tinto in November.
Both BHP Billiton and Rio Tinto are dual listed companies with separate listed parent entities in the United Kingdom BHP Billiton Plc and Rio Tinto plc and Australia BHP Billiton Limited and Rio Tinto Limited). BHP Billiton Limited is making inter conditional Offers for all of the Rio Tinto plc and Rio Tinto Limited shares.
