Anglo-Australian mining company Rio Tinto has announced its rejection of an acquisition bid by the world's largest miner Australia-based BHP Billiton Ltd., stating that the offer significantly "undervalues Rio Tinto and its prospects." The takeover proposal in question, according to which each Rio Tinto share was to be exchanged for three BHP Billiton shares, would have resulted in the creation of a new company worth an estimated total of $350 billion.
The news of the BHP Billiton bid had resulted in a sharp increase in the value of Rio Tinto's shares. Following the rejection of its offer, BHP Billiton has revealed that it has again written to Rio Tinto's BoD and that it intends to continue to seek an opportunity to meet and discuss its proposal. Meanwhile, Rio Tinto has said that it will focus on integrating its operations with the leading aluminum producer Alcan.
A probable takeover would bring up significant competition hurdles, though BHP Billiton indicated that it has a strategy to deal with anti-trust issues, saying they have examined in detail the regulatory issues and other practicalities of a combination.