The world's third-largest mining company Rio Tinto has announced the rejection of rival mining giant BHP Billiton's formal increased takeover bid to acquire the whole of the issued share capital of Rio Tinto Plc and Rio Tinto Limited after the Boards of Rio Tinto gave "careful consideration" to the latest offer.
According to the proposed $147 billion takeover bid, each Rio Tinto share would be exchanged for 3.4 BHP Billiton shares. However, the Boards of Rio Tinto concluded that the pre-conditional offer significantly undervalued Rio Tinto and its assets and made public that it was not in the best interests of the shareholders.
As previously reported, BHP Billiton raised its takeover bid for Rio Tinto by 13 percent five days after state-owned mining company Aluminum Corporation of China (Chinalco) and Alcoa Inc. (AA) acquired a 12 percent stake in Rio Tinto Plc, in a move widely seen as an attempt to block or complicate the BHP Billiton bid.
Commenting on the issue, Rio Tinto chairman Paul Skinner said their plans are unchanged and will remain so unless a proposal is made that fully reflects the value of Rio.
It is also reported in newspapers that Chinalco may be preparing a bid after Rio Tinto's latest rejection.