BHP Billiton Offered to Buy Rio; Proposal Rejected (Correct)
By Tan Hwee Ann and Dale Crofts
(Corrects pence to percent in second paragraph.)
Nov. 8 (Bloomberg) -- BHP Billiton Ltd., the world's biggest mining company, said it offered to buy rival Rio Tinto Group, a proposal that was rejected.
BHP, based in Melbourne, said in a statement to the Regulatory News Service it ``recently'' wrote to the Rio board with an outline plan for a merger. BHP has again written to Rio to try to arrange a meeting. Rio stock rallied as much as 24 percent in London, while the company has a current market value of $158 billion.
A combined company would challenge Brazil's Cia. Vale do Rio Doce as the world's largest supplier of iron ore as rising demand in China pushes prices of the raw material used in steelmaking to a record. BHP would also gain access to more than 15 million tons of copper and 4.3 million tons of aluminum. Rio Tinto's annual profit rose 43 percent to $7.44 billion in 2006.
``Rio is a massive cash generator,'' Joe Youssef, a senior adviser at Macquarie Equities Ltd. in Sydney, said before today's statement. ``You can see why it's an attractive proposition based on its cash flows.''
Rio Tinto shares rose to as high as 5,399 pence, a record, and traded at 5,200 pence as of 11:05 a.m. in London.
