J Chinalco Said To Prepare Counterbid For Rio Tinto -Report
06/02/2008 01:57PM AEST
DOW JONES NEWSWIRES
Rio Tinto Ltd.'s (RTP) new Chinese shareholder Chinalco is preparing to counterbid for Rio, according to The Times in London on Wednesday.
BHP Billiton Ltd. (BHP), the world's largest mining company, raised its bid for Rio to more than GBP70 billion Tuesday. BHP launched a hostile offer worth 3.4 of BHP's shares for every one of Rio's, according to The Times.
The deal values Rio at GBP54.29 a share, just 5 pence below its closing price Tuesday but way below the GBP60 a share that the Chinese paid for their stake last Friday.
Chinalco, the Chinese aluminium producer, and its partner Alcoa Inc. (AA), bought a 9% stake in Rio for $14 billion (GBP7 billion) in Bejing's biggest foreign investment, The Times said. This has effectively set a benchmark price for the world's second largest miner, The Times said.
Rio Tinto said that it was considering BHP's offer and urged shareholders to take no immediate action, according to The Times.
Sources close to Chinalco had earlier said that it was likely that China would intervene and counterbid if BHP raised its offer, although observers said it could face regulatory hurdles, The Times said. The Chinese are already seeking approval in Australia to raise their holding to 19.9 percent and may go further to ensure that BHP is blocked, according to The Times.
Newspaper Web site: http://timesonline.co.uk
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