BHP Billiton Makes Offer to Buy Rio Tinto, Rio Rejects It

Rio Tinto and BHP Billiton confirmed Thursday the speculation that BHP Billiton made an offer to buy its rival Rio Tinto. The latter rejected the approach. Since the offer was made public, Rio Tinto’s stock shot up 31.95 percent, from 4,350 p at the previous day’s close, to the day’s peak of 5,740 p on the London stock exchange.

BHP Billiton recently wrote to the board of Rio Tinto, outlining a proposal for a potential merger, incorporating a premium, as well as seeking to pursue discussions with Rio Tinto.

Rio Tinto noted that its management had given the proposal careful consideration and concluded that the offer significantly undervalued its worth. Under the terms of the proposal, each Rio Tinto share would be exchanged for three BHP Billiton shares.

Rio Tinto’s management moved to reject the proposal, as not being in the best interests of its shareholders.

BHP Billiton said it intends to continue seeking an opportunity to meet and discuss the proposal.