UBS analysts said they believe Rio's rival and former predator BHP Billiton could offer an alternative to the Rio board prior to a shareholder meeting expected by the end of July.
BHP could offer to underwrite a substantial rights offering for Rio, and in exchange propose a joint venture of the pair's iron ore operations in the Pilbara region of Western Australia, UBS said.
The synergies on offer from bringing together the twin Pilbara iron ore operations are substantial and were at the centre of BHP Billiton's failed bid for Rio last year.
BHP Billiton Ltd., the world’s largest mining company, may offer to help raise capital as an alternative, UBS AG analyst Glyn Lawcock wrote yesterday in a report. The two companies may save as much as $10 billion by combining their iron-ore assets in the Pilbara region of Western Australia state through a merger or joint venture, the report said.
RIO's "Juna Downs" project and BHP's "Central Pilbara Mega Hub" combined with UMC stuck in the middle...
UMC Price at posting:
$1.15 Sentiment: Buy Disclosure: Held
