Rio Welcomes “Put Up or Shut Up” Deadline on BHP Offer

Rio Tinto announced last week that it welcomed the decision made by the Takeover Panel Executive to impose a “put up or shut up” deadline of February 6, 2008 on BHP Billiton’s offer for its rival, Rio Tinto.

By the February deadline, BHP must either announce a firm intention to make an offer for Rio or announce that it does not intend to make an offer. If BHP announces the latter, it will be bound by Rule 2.8 of the UK Takeover Code and will be barred for making such an offer for six months.

On November 8, the two mining giants confirmed that BHP had made an approach to buy Rio, an offer that valued three BHP shares for every one of Rio Tinto’s. Rio rejected the offer, saying that it grossly undervalued the company’s worth. 

On December 11, Rio Tinto requested from Britain’s Takeover Panel to impose a deadline by which BHP would be forced to formalize its approach. By the February 6 deadline, BHP will have had three months to make a decision, and Rio said that it believes it is in the interests of the group and its shareholders that this period of uncertainty is brought to an end.

"The Boards are unanimous in the view that BHP Billiton's rejected proposal was wholly inadequate and that Rio Tinto's very strong existing portfolio will create significant future value for shareholders,” commented Paul Skinner, chairman of Rio Tinto.

“We have been very clear as to where we stand and feel it is time for BHP to do likewise. Our shareholders deserve to have certainty and therefore we welcome the panel's decision today.”