October 16, 2008

BHPB bid for Rio – Baosteel report denied but may hike asking price

Toward recent report by the 21st Century Business Herald saying that Baosteel led Chinese steel maker lobby is likely to bid for Rio Tinto, none of these parties involved including Baosteel, Chine Iron & Steel Association, BHP Billiton and Rio Tinto had given any comments and according to a report by Orient Morning Post, it was probably because of misunderstanding of Mr Xu's word the chairman of Baosteel.

As per report in Orient Morning Post Mr Qi Xiangdong deputy secretary general of CISA met Mr Xu Lejiang in Beijing and said that “What Baosteel is considering is how to confront BHP's bid proposal to Rio Tinto, rather than launching its own bid. It is undoubted that the steel enterprises are studying countermeasures but no confirmed info says Baosteel is to bid.”

Meanwhile, Mr Tan Yixin GM of the minerals import & export of Shougang International Trade & Engineering also denied their intention to participate in the takeover. He said “Not now, nor in future."

However, Mr Xu's statement may be a signal to raise the takeover threshold with the purpose of preventing it from happening.