Rio Asks Takeover Panel to Set Deadline for Formal BHP Offer

Rio Tinto challenged BHP Billiton today to make a formal bid for a takeover purchase or to walk away from what could be, according to Reuters, the second biggest takeover ever.

Rio revealed that it has asked Britain’s Takeover Panel to set a deadline rule by which BHP would have to formalize its approach, more than a month after BHP’s share proposal to buy the rival miner was made public. Rio rejected the bid saying BHP had grossly underestimated its value.

According to takeover regulations in Britain, once this “put up or shut up” rule is put into effect at the request of the target company, the other must either make a formal offer within a designated period – usually 1-2 months – or withdraw for at least six months before coming back with a formal bid or proposed offer.

The proposal has provoked widespread speculation of looming counter bids from Chinese steel firms and the investment group Blackstone. It has also triggered protests from the world’s steel makers who fear that a combined Rio-BHP group would be able to set raw materials prices.

A combined group would hold sway over approximately 27 percent of the world’s iron ore and would also control the global market of coal, copper, uranium and diamonds.

BHP has asserted that hasn’t given up. “We remain committed to what we believe is a logical and compelling proposal and we would like Rio Tinto to engage with us,” a BHP spokesperson commented.