prawn_86
Mod: Call me Dendrobranchiata
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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.
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$130 is just the beginning..
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.
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
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.
December 10:
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.
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
CheersThe 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.
...........Kauri
From what I have managed to glean.... malarkey, bunkum,bollocks,.... i.e not on..
Cheers
........Kauri
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?
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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