# What will happen to BHP and RIO after Feb 6th?



## zhang66777 (31 January 2008)

i am new here, is there anybody who can tell me what will happen to both bhp and rio after feb 6:

1.how about if bhp offer more
2.bhp walk away
3.bhp offer less or same

i think 2 or 3, rio will drop, but i am not sure about 1.

somebody please help me out although to some people it sounds like idiot question.

many thanks


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## vishalt (31 January 2008)

*Re: what will happen to BHP and rio after FEB6?*

Hardly an idiotic question. 

No-one in the world knows what is going to happen, they can only guess. 

I think the media will just rant on about it for a while and then no-one will care and BHP/Rio will just keep making massive amounts of money and the share price will go up eventually. 

I'd be happy if BHP walks away though, I think it makes a higher bid then it will have the "OH MY GOD THIS COMPANY HAS DEBT! *KILL IT!*" sentiment.


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## Nyden (31 January 2008)

*Re: what will happen to BHP and rio after FEB6?*

If it goes through; BHP over-paid
If it fails; sentiment for M/A & commodities sector in general takes a beating ...


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## agro (31 January 2008)

i honestly believe that BHP will wipe RIO clean through a bigger and better offer


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## zhang66777 (1 February 2008)

many thanks


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## agro (2 February 2008)

http://www.abc.net.au/news/stories/2008/02/02/2152783.htm?section=justin
*
BHP may up bid for Rio Tinto: analyst*

Posted 1 hour 2 minutes ago
The BHP Billiton logo.

Ball in BHP's court: The mining giant is now expected to make a new offer for Rio Tinto (Reuters: Tim Wimborne)

    * Related Story: China-Alcoa stake in Rio threatens planned BHP bid

Mining analysts say BHP Billiton could come forward with new bid for its Rio Tinto within days, on the back of news that a Chinese company has purchased a significant stake in the rival firm.

Chinalco last night announced it had bought a 12 per cent stake in Rio Tinto, just days before the deadline for BHP to make a takeover bid.

Rio has already rejected BHP's initial $136 billion share offer, but Ambrian Capital Partners spokesman Julian Emery says the move from China could prompt BHP to strengthen its offer.

He says BHP was probably prepared for the possibility that another company might buy a significant stake in its rival miner.

"I'm sure they've done all their sums and they know exactly what they are prepared to offer," he said.

He says it is likely Chinalco waited until the eve of the deadline to deter BHP from making another bid for Rio.

Mr Emery says the newly purchased stake is also good for investors in China and could help to create a fairer playing ground for investors.

"It's always been rumoured that the Chinese are a bit jumpy about the combination of BHP and Rio, as [it could have] too much control over some of the major commodities that China are interested in importing," he said.

"They may have been concerned about the price-fixing element."


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## vishalt (2 February 2008)

The writer of that article and the analyst are both amazing. 

"expected to make a new offer for Rio Tinto" - who the hell is expecting it? I hold shares of both and I'm not expecting it? But some quirky analyst has said that BHP will just analyse this over the weekend, snap their bidding fingers and raise their bid that quickly. 

_I'll eat my own words if BHP do raise the bid._


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## Kauri (2 February 2008)

vishalt said:


> The writer of that article and the analyst are both amazing.
> 
> "expected to make a new offer for Rio Tinto" - who the hell is expecting it? I hold shares of both and I'm not expecting it? But some quirky analyst has said that BHP will just analyse this over the weekend, snap their bidding fingers and raise their bid that quickly.
> 
> _I'll eat my own words if BHP do raise the bid._




   BHP has a team working full-time on nothing else other than aquisitions.. whether it be RIO or other companies.. to think that they will anylase over 1 weekend beggars belief..    .. their next move (on RIO or not) has been decided and locked away... ready.. it's not a loaf of bread they are buying!!!!

The Chinalco-Alcoa stake just *might *be more of a bargaining chip to prise the merged ali assets out of a combined BHP-RIO... as opposed to a genuine blocking stake... mainstream press is good at reporting what *has* happened already... not at what might happen in the future.. think a step or three ahead and look for possibilities that may be profitable opportunities... I thunk...  
Cheers
...........Kauri


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## cordelia (2 February 2008)

Kauri said:


> BHP has a team working full-time on nothing else other than aquisitions.. whether it be RIO or other companies.. to think that they will anylase over 1 weekend beggars belief..    .. their next move (on RIO or not) has been decided and locked away... ready.. it's not a loaf of bread they are buying!!!!
> 
> The Chinalco-Alcoa stake just *might *be more of a bargaining chip to prise the merged ali assets out of a combined BHP-RIO... as opposed to a genuine blocking stake... mainstream press is good at reporting what *has* happened already... not at what might happen in the future.. think a step or three ahead and look for possibilities that may be profitable opportunities... I thunk...
> Cheers
> ...........Kauri




so if BHP does acquire Rio what is likely to happen to its share price...or a possibility rather....what if it walks away


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## ithatheekret (2 February 2008)

cordelia said:


> so if BHP does acquire Rio what is likely to happen to its share price...or a possibility rather....what if it walks away




There's always FMG .......... but they don't have too much coal from memory , so that would be an iron ore play .

Walk away ........ I'd say they've just opened the door to keep the bid alive .


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## Garpal Gumnut (2 February 2008)

cordelia said:


> so if BHP does acquire Rio what is likely to happen to its share price...or a possibility rather....what if it walks away




No matter what happens BHP will go down and RIO will go up in the medium 6-12 month term. See my chart on the BHP forum for my thoughts on BHP.

gg


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## agro (2 February 2008)

ithatheekret said:


> There's always FMG .......... but they don't have too much coal from memory , so that would be an iron ore play .
> 
> Walk away ........ I'd say they've just opened the door to keep the bid alive .




FMG i doubt are on the cards - Forrest has 36% stake with the majority held by Chinese steel companies. 




Garpal Gumnut said:


> No matter what happens BHP will go down and RIO will go up in the medium 6-12 month term. See my chart on the BHP forum for my thoughts on BHP.
> 
> gg




not too sure, BHP if it does take RIO will prob short decline but will probably reach a higher SP at a quicker pace

i remember when they took WMC over and it did a world of good for their earnings


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## Garpal Gumnut (2 February 2008)

agro said:


> not too sure, BHP if it does take RIO will prob short decline but will probably reach a higher SP at a quicker pace
> 
> i remember when they took WMC over and it did a world of good for their earnings




Thats a good point, I'll keep an eye on my charts

gg


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## agro (2 February 2008)

what can i say.. only time will tell


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## the barry (2 February 2008)

agro said:


> here's my take (no chartist)




Agro,

your being a bit simplistic in your approach. You have to also look at market conditions as to why the share price has done what it has. Even if bhp hadn't announced its takeover plans the share price would be where it is now moving in line with market conditions. Bhp will move back up in line with the market, regardless wether the takeover is succesful or not.


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## vishalt (2 February 2008)

Just look at BHP/Rio's graphs for the last several years, they have *always* followed each other in a similar pattern (except till this takeover scenario) even if there are some delays sometimes.


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## Lucky_Country (2 February 2008)

BHP up on takeover or no takeover 
RIO up on takeover down on no takeover but will rise in medium term on commodity boom and increased production.


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## ithatheekret (2 February 2008)

agro said:


> FMG i doubt are on the cards - Forrest has 36% stake with the majority held by Chinese steel companies.
> 
> 
> 
> ...




Unless Twiggy can't stand the same air space , I don't see how this could stop any friendlies .............

He has yet to get around a few problems , fantastic operator that he is , even the best of them flatten their noses against Parliaments walls .

I remember WMC too , pre Rose days as well . They got it cheap !


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## jet328 (2 February 2008)

Doubt BHP or RIO would be interested in FMG even if they could get it without a takeover premium. The big two know the area well and were producing when prices were much lower. As a result they have the better tenements while FMG have the lower grade stuff.


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## kengaikl (2 February 2008)

I reckon BHP will probably increase their bid by a little so to be rejected by RIO and adopt a wait and see approach on RIO given now the chinese have a stake in RIO. As with their share price they will go up along with RIO regardless of whatever happens on Feb 6th. Simply if investors pick up RIO stock for their perceived value they will do the same for BHP as both are basically same businesses.


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## matilda (3 February 2008)

http://business.timesonline.co.uk/b... are deemed not to be in the public interest.


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## sassa (3 February 2008)

matilda said:


> http://business.timesonline.co.uk/b...g acquisition orders?
> Can someone inform me?


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## Nicks (4 February 2008)

I think BHP shareholders will be happy with either way, including a walk away. We dont want to pay too much and BHP is performing stellar as they are anyway.If BHP aquires Rio then thats good too, as with the synergies and strength it willl be a very nice businesss.
Rio on the other hand which shot up like a hot air baloon with the takeover announcement is likely to deflate just as quick if BHP walsk away, leaving some very dumbfounded shareholders and red faced board. Greed takes over sometimes.
Sure their is value in the stock, but the implied premium will go and this could snowball as investors and traders bail out. Dangerous sopt to be in if you ask me.
With the Chinese potential blocking stake in Rio this looks like it could be quite likely the outcome.


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## ithatheekret (4 February 2008)

Which manufacturer would want BHP and Kloppers to get the coal monopoly ?

Certainly not a Chinese one , browse the coalers for position and vunerablity .


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## long$$ (5 February 2008)

ithatheekret  - I understand that their are enormous coal deposits in Mongolia suitable for open cut mining so it is not likely in the long term that BHP-B would get a monopoly in coal that would threaten China.

Further to BHP-B, are their any thoughts on the likely reaction of the Australian Gov to the Chinese/Alcoa move. It seems to me that the leading players are in Oz at the moment to find that out.


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## agro (5 February 2008)

Chinalco ready to sell
Updated: 08:04, Tuesday February 5, 2008
Chinalco, Rio Tino's newest major shareholder, has confirmed it is prepared to sell its 12 per cent stake in the company, to BHP Billiton.

That's if it makes money on the deal.

The company says the purchase was a strategic investment to diversify its options and won't interfere with Rio management.

The buy was made in London because of market liquidity and in terms of timing the decision was made based on price. 

The fact that it came close to BHP's deadline to formalise its bid for Rio was pure coincidence.

It's also confirmed it has no future plans to increase its 12 per cent stake in Rio, although it is looking at other Australian investments.

On the sector as a whole, Chinalco executives say they see strong demand and prices for metals and that the general global outlook is strong.


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## vishalt (5 February 2008)

I reckon Chinalco/Alcoa's stake in Rio is a clear sign that the mining boom is still alive (with many more years to go) and that the Chinese are snappy about their iron ore supply while Alcoa is scared about its position as one of the biggest aluminum plays in the world. 

The Chinese government and Alcoa surely wouldn't be dumb enough to pay $150 for each Rio Tinto share if they thought it was a waste of money.


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