synergies , page-2

from Times Online

Revived talk that BHP Billiton, up 2p at £13.92, could make its own financing offer to Rio Tinto, gazumping Chinalco’s deal, helped Rio to rise 91p to £25.94. Amid the usual chatter that BHP could renew its all-share offer at a lower ratio, Glyn Lawcock, the UBS analyst, said that, more probably, BHP would approach Rio before the end of July – when Rio investors vote on the Chinalco deal – with an offer to underwrite a rights issue and in return agree a joint venture for their iron ore assets in the Pilbara region. Mr Lawcock believes that the combination would save 10 to 15 per cent of costs in the region and would allow Rio to cut its capital commitments, representing a total value of $8 billion to $10 billion to Rio. The pair would also have a stronger hand when negotiating iron ore prices with China and Asia.