September 08, 2008

BHPB bid for Rio - BHP claims support from Rio shareholders

BHP Billiton claimed that shareholders were supportive of its proposed mining mega-merger with Rio Tinto.

Mr Marius Kloppers CEO of BHPB head, while speaking in South Africa, which he is visiting as part of a global road show to sell the group’s proposed merger plans, said that the investors in both Rio and BHP he had met so far had been broadly supportive of the rationale behind the deal.

Mr Kloppers said that he had met around half of Rio’s UK shareholders and slightly less of its Australia based investors. He said “Shareholders own companies, not management and they will eventually tell management what to do.” He added that BHP would continue to seek engagement with Rio Tinto’s board.

But he added that BHPB may consider taking an offer directly to Rio's shareholders. He said that BHPB is aiming to bring Rio's board to the table by asking Rio shareholders to put pressure on management. He said "We are talking directly to shareholders; we ask shareholders to ask management to engage to deliver this."

Mr Kloppers said "We are hopeful that management will engage with us, but certainly that is one of the options that should be considered down the track, but that is simply not a decision that we have got to take today."

He stressed that BHP had not made a formal offer but had only presented a proposal to Rio's management. He said "At a certain moment in time the UK regulators will ask you to either make an offer or not, but we are only at the start of that process."

On the other hand, Rio is preparing to respond to Mr Kloppers’s investor charm offensive with a formal defense of its decision for rejecting as too low the proposed tie up. It is to use an existing iron ore seminar on November 26th 2007 to explain its rationale to shareholders. Mr Tom Albanese CEO of Riois expected to focus on hidden” assets, such as the company’s development pipeline, which are not reflected in the business’s present valuation.