Australian (ASX) Stock Market Forum

RIO - Rio Tinto

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Bloomberg has something about BHP securing $70 billion through citigroup, so the next offer (if there is one) might not be a total scrip offer.
 
Yeah I think this is going to get a whole load uglier, its like Barclays vs RBS for ABN Amro, those were big bids and there were a lot of them.

I might actually take up a small position in Rio again.
 
Yes, I agree, I think both RIO and BHP will go up on this news.

What did the Chinese say about living in interesting times ??

gg
 
gfresh said:
$130 is just the beginning.. :2twocents

News over the weekend indicates BHP has secured another $US70B from Citigroup which could be added to their $140B offer of 3 for 1. This may allow them to try for a possible 4 for 1 to secure RIO.

Given current market conditions, would anybody agree that BHP would like to stitch this up as quick as possible, so their SP doesn't drop too much further? Hence costing them more for the bid? Also under British takeover rules, apparently they must launch another offer within 8 weeks if they are to do so.
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If they bid 4:1 their share price would sink out of sight. Mainly as RIO shareholders would own more of the merged entity, not a great outcome when BHP's cap is considerably larger

The market has RIO at 3.1 right now - looks about right
 
An exciting stock to watch this RIO nowadays isn't it? :D

I looked at its latest annual reports numbers (Dec2006...seems like light years away) from value prospective so for those of you interested in fundamentals you are welcome to have a look http://www.soundofgold.com/2007/12/05/australia-rio-tinto-ltd-2006-financial-results-analysis/

For my money: its a great company with seemingly not much clouds on horizon in the immediate future. If there is something to worry about than perhaps purchasing this stock at too high a price and overall cyclical nature of mining/resources/commodities industry. Oh yeh and don't forget the potential takeover related risks.
 
haemitite said:
If they bid 4:1 their share price would sink out of sight. Mainly as RIO shareholders would own more of the merged entity, not a great outcome when BHP's cap is considerably larger

The market has RIO at 3.1 right now - looks about right
Click to expand...

Yes, why does everyone believe the offer has to go up in increments of 1 share? Offers do get made in .5 & the likes as well, guys :p:

The market doesn't seem to be biting at the current offer yet though, so - something is going to have to budge. I'm a BHP only holder, so I'm personally hoping they don't offer anymore (or very little), as we'd be overpaying then! :D Which I'm sure you Rio Tinto holders would just love though
 
Hope China bids for Rio and blows BHP's muscle out of the water, I don't want us to merge with Rio, the cultures and pipelines are so different and if you look at the biggest mergers in the past - bigger is not usually better!
 
Wow, Rio has by far been one of the best big cap choices.

India might bid for it now!!

A CONSORTIUM of Indian steel companies is being urged to join the bidding for Rio Tinto.

smh said:
An editorial in the influential Indian newspaper The Economic Times on Thursday advocated an Indian takeover of the mining giant backed by the Indian Government's growing reserves of foreign currency.

It proposed using a sovereign wealth fund being considered by the Government to help fund a consortium bid for Rio Tinto including the Indian producer Tata Steel.

One Indian business source described the proposal as most surprising, but added anything was possible.

The agitation for an Indian takeover of Rio Tinto demonstrates how the BHP bid for Rio is being closely scrutinised in India. It also points to concern in India about the power BHP could have in several key commodities markets if it were to successfully acquire the mining company.

There is also concern in China about a BHP takeover of Rio Tinto and there have been reports Chinese firms could mount a rival bid for the miner.

India, like China, has a huge demand for raw materials to fuel its rapidly growing economy and is sensitive about threats to its energy security.

India exports iron but local steel producers have called for this to be banned to ensure supply to local mills.

The Economic Times said Tata Steel, or a consortium of Indian steel companies, would be preferred on anti-monopoly grounds.

The Indian Government is understood to be considering putting part of its $US270 billion ($309 billion) of foreign exchange reserves into a sovereign wealth fund.

"Why not earmark say $50 billion at a commercial interest rate to an Indian steel consortium to take over Rio?" says the Economic Times editorial. "This will contravene traditional financial norms. But it will be the sort of giant visionary leap that makes history."

However, there would be a number of organisational obstacles in the way of a diverse Indian consortium involving the private and public sectors.

Analysts say Tata Steel was stretched to raise enough funds for its recent $US7.6 billion takeover of the European steelmaker Corus, and buying Rio Tinto would be more expensive.
Click to expand...
 
I would not bet on China or India buying RIO as the government will oppose it. BHP is your best bet but I don't think they will go much higher unless they are push to do so. I think the deadlock will have to be broken before Iron ore negociation at the beginning of the year
 
Cheers for the article Kauri.
I suppose China's hunger for iron ore will continue for a while yet. Sort of a catch 66 for them. They are using so much iron ore, that they have driven the price up on themselves.
Now with Private Equity set to join the battle over RIO. Other fund managers are talking of RIO s/p going to $180 in the next few months.
 
Kauri said:
Fact... or rumour... I guess all will be revealed in due course.. of course:)
http://www.telegraph.co.uk/money/ma...GAVCBQWIV0?xml=/money/2007/12/10/cnrio110.xml
The UK Telegraph is reporting today that Blackstone is to join the battle for
mining giant Rio Tinto. The report indicates that the consortium put together by
Blackstone includes the China sovereign wealth fund.
Click to expand...
Cheers
...........Kauri
Click to expand...

From what I have managed to glean.... malarkey, bunkum,bollocks,.... i.e not on..
Cheers
........Kauri
 
Kauri said:
From what I have managed to glean.... malarkey, bunkum,bollocks,.... i.e not on..
Cheers
........Kauri
Click to expand...

Hi Kauri, what makes you say this isn't likely?

With regards to the RIO announcement requesting a bid deadline from BHP, how far away is this deadline likely to be - days, weeks, months..?

I was of the understanding that BHP, under UK stock exchange law once the merger proposal was announced, had 8 weeks in which to make a formal bid for RIO or walk away for a period of at least 6 months. Do I have my facts straight here?
 
lamot1 said:
Hi Kauri, what makes you say this isn't likely?

With regards to the RIO announcement requesting a bid deadline from BHP, how far away is this deadline likely to be - days, weeks, months..?

I was of the understanding that BHP, under UK stock exchange law once the merger proposal was announced, had 8 weeks in which to make a formal bid for RIO or walk away for a period of at least 6 months. Do I have my facts straight here?
Click to expand...


I believe the deadline is one month after BHP made the formal announcement...but, I'm not sure on when that was!

As mentioned many times - The Australian government might not allow for a foreign entity to buy up one of our market-darlings, so I too doubt any of that will come to fruition.
 
Hmm what I don't really get is why would Blackstone go after Rio? The sovereign Wealth Funds of China that what "supposedly" fund this deal can buy Blackstone like a fat man buying candy at a confectionery store...

But then again UK Papers have a tendency to be overly wrong about takeover rumours (BHP for Alcoa, Advanced Bionics for CSL, Rio for Anglo American, Teck Cominfo for Zinifex, General Electric for Dow Jones to name a few :) )

AIR said:
Another Rio Bid Fairytale
December 11 2007 - Australasian Investment Review – (AIR)

Once again the credulous financial media in Britain is being used to float rumours about BHP Billiton and Rio that bear little resemblance to what has been going on in the real world.

Last week it was the Chinese media being used, with an honourable assist from London.

Yesterday it was London in a starring solo role.

The London Telegraph newspaper reported (http://www.telegraph.co.uk/money/main.jhtml;jsessionid=QNLF1UML
UL0JDQFIQMFCFFWAVCBQYIV0?xml=/money/2007/12/10/cnrio110.xml) that the US private equity group, Blackstone "is mulling an audacious break up bid for Rio" with perhaps China's sovereign investment fund.

Now Santa Claus and the Easter Bunny are still a little in the future, and perhaps this 'audacious' bid might happen, but isn't it a bit passing strange that this story breaks hours after two deals in Australian fell over worth more than $11 billion, one of which involved Blackstone.

Singapore controlled power group, SP AusNet said it had abandoned plans to but electricity assets from its parent company because the $8.3 billion needed couldn't be raised.

And a three party consortium including Blackstone which had indicated interest in bidding $3.1 billion for agricultural chemical group, Nufarm, let a deadline of last night slip and didn't commit.

All that suggests credit markets are all but closed and money is very tight.

Nufarm said the consortium included Blackstone and US group Fox Paine, plus the main partner, China National Chemical Corporation. The mooted offer was for $17.25 cash for each Nufarm share plus a payment of a pre-acquisition dividend of up to 30c per share.

And the Bank of International Settlements, the central banks' central bank, has warned that the lending crunch would continue past the first quarter of 2008.

That means raising the billions for the bid for Blackstone and its mooted Chinese partner, or selling the assets, would be extremely rough for at least the next six months or longer because of the credit drought.
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just for the record
here's RIO for the last 2 years (High Low Close) + averages
Also RIO vs XAO for last 12 months (candlestix) + ditto (percent indicates relative preformance campared to datum of XAO)

PS I plan to do this to a few stocks - please feel free to either
a) help out an divvy the job up between a few of us
b) suggest amendments to graphs
c) request some stocks you'd like me to post (maybe PM me)
d) tell me it's not necessary lol (or too wasteful of memory maybe?)
 

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hello, i keep saying to myself that its a no brainer and that with the bhp bid and rumours about about 3 and a bit shares and some cash in the offer as well that rio's price is undervalued. with the sp down quite significantly from previous highs, i would think that it should pick up again. evidence that my thinking is perhaps right on friday when rio up when most other stocks down. would anyone else agree that as far as picking stocks to go long in, that rio at the moment is as certain as it gets?
was thinking too to make up for monster losses lately, to do a crazy thing and take out a large cfd long 200k on rio.
Any comments about this as well would be appreciated
cheers, ben
 
There is a chance that BHP will walk away from the RIO takeover offer. If that happens, then the RIO share price will most likely drop quite a bit.
 

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