Replies to post #9079 on Copper King Mining Corporation fka CPRKQ

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Rio boss says BHP bid 'too low'

Rio Tinto is to spend on new mines as it seeks to fend off BHP
Mining group Rio Tinto says a takeover approach of about $130bn (£63.2bn) from BHP Billiton is "a couple of ballparks away" from its true value.
Rio chief executive Tom Albanese said BHP's all-share move did not recognise his company's future prospects.

He told Australia's ABC TV station that the market agreed Rio was worth more.

BHP Billiton has offered three of its shares for every Rio Tinto share, and Rio shares are trading at about a 17% premium to the offer.

"We've seen the market move well past the BHP proposal, which we rejected, and the market to some extent is speaking," Mr Albanese said.

"It's basically saying that: 'Yes, we agree it's worth a lot more,'" he said.

Strong demand

He did not offer an opinion of Rio Tinto's worth, but said it was "ballparks away" from the BHP proposal.

If the approach were to succeed, it would be the world's second-biggest takeover deal after mobile phone giant Vodafone's purchase of Mannesmann in 2000.

Rio has said it will spend at least $2.4bn on new mines and increase its dividend as it battles to fend off the bid from BHP Billiton, the world's biggest mining group.

Analysts say that Rio's refusal to team up with BHP is indicative of its conviction that mineral and metal prices will stay high for years to come, fuelled by strong demand from emerging economies such as China and India

http://news.bbc.co.uk/1/hi/business/7123518.stm

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Round two starts in Rio, BHP battle Font Size: Decrease Increase Print Page: Print John Durie | December 11, 2007
RIO has moved to restrict BHP Billiton's options by seeking a UK Takeover Panel ruling to force BHP to formally launch a takeover bid to move the battle into the next round, but by no means the last stake of this epic battle.

Strategically, the move by Rio will come as no surprise to BHP.

BHP has gathered its key advisers in London, with chief executive Marius Kloppers preparing its next step, which will no doubt start with an attempt to delay any formal bid.

Under UK rules, a party to takeover talks can force the potential bidder to either make a bid or withdraw for up to six months.

Rio has waited to let the market respond to BHP’s initial attempts to engage around a premium offer of three of its shares for one Rio share and having rejected the proposal has made clear it has no intention of talking with BHP.

While BHP was right to argue its offer was at a premium, it erred by effectively using that original proposal as the floor price for what will inevitably be a higher bid if a formal offer proceeds.

The market is now valuing both companies at 3.3 to one, which means BHP will have to at least match that price in any bid ensuing from the Takeover Panel talks.

Rio will argue BHP is engaged in a process of undermining its stock price, which is why the Panel needs to intervene, and for its part BHP will argue the any such moves will rob Rio shareholders of the increased value on offer due to the complexity of a bid for a dual listed company.

While the proposal has its complexities, the BHP argument is nonsense.

At the end of the day all the difficulties wash away with an offer deemed to fairly value Rio, because its shareholders have the final say on what the Rio board must do with the 37 per cent stake it controls in the Australian listed arm.

BHP will talk up the claimed poison pills in Rio, like that 37 per cent stake, but this is merely talk given the ease with which the hurdles can be crossed.

It is obviously in BHP’s interest to hammer out the details behind closed doors with the Rio board, with the two sides then selling the benefits of their agreement to their respective shareholders.

But it is in Rio’s interests to get BHP to put the details of any bid on the table to let the shareholders decide.

Rio has established its case that the original proposal didn’t fully value the company and furthermore that BHP needs Rio more than Rio needs BHP.

The claimed synergy benefits centre on merging their iron ore assets in Australia along with the future benefits of developing new projects as a larger entity.

Rio’s has not only developed its iron ore assets better than BHP but has prepared a better platform for future growth.

The game in world mining is clearly consolidation - to buy assets on the bourse rather than risk delays and costs in project development - and nothing illustrates that more than BHP’s Olympic dam assets in South Australia, which will cost some $US20 billion ($A22 billion) to develop even though the underlying assets are undeniably first class.

BHP has more tricks up its sleeve and some have even speculated that it will bring a new partner to the bid, a strategic bidder who may be interests in some of the combined assets.

A spin-off of its oil assets is also a key alternative.

Having lost the first round, the ball is now in BHP’s court and hopefully it will play the game better in round two of what will be a 10 round battle.

http://www.theaustralian.news.com.au/story/0,25197,22905959-30538,00.html