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Merged BHPBill will not abuse position of power
BHPBill CEO Marius Kloppers was quoted in Business Report as assuring Chinese steel makers, who are the biggest buyers of iron ore, that a merged BHPBill and Rio Tinto would refrain from using its dominant position in the iron ore market to control prices. Kloppers is touring Asia to win the support of the continent’s steel makers for the merger, which some say could hurt steel producers by charging higher iron ore prices.
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BHPBill's Rio Tinto bid opposed by steel makers
According to Business Report, the International Iron and Steel Institute said that BHPBill's proposed takeover of Rio Tinto would create a virtual monopoly in iron ore, and should therefore be blocked. The institute said that it is vital that the competition authorities in the EU, US, China, Australia and Japan recognise the threat that the merger posed to the interests of steel consumers and the general public. A merged BHPBill and Rio Tinto would control 38% of the market in seaborne iron ore.
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BHPBill -- appointment of group CE of non ferrous
BHP Billiton announced that it has appointed Andrew Mackenzie as Group Executive and Chief Executive Non Ferrous. Mr Mackenzie will be a member of the Group Management Committee. Mr Mackenzie will assume the role following the succession of Marius Kloppers from the position of Group President Non Ferrous to Chief Executive Officer on 1 October this year.
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Successful BHPBill bid could jeopardise smelter
BHPBill chief executive Marius Kloppers told Business Report that it was "pure speculation" that that the planned acquisition of Rio Tinto would jeopardise the development of the Coega smelter. However, the company refused to be drawn into whether it would support the development of the USD2.7 billion (R18 billion) Coega aluminium smelter if it succeeded in acquiring Rio Tinto, the owner of the project.
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BHPBill -- combination with Rio Tinto
The Board of BHPBill has recently written to the Board of Rio Tinto proposing a combination of their respective companies to create an organisation without peer in the natural resources industry. The Board of BHPBill has sought and continues to seek to engage in discussions with Rio Tinto with a view to obtaining the support and recommendation of the Board of Rio Tinto for this proposal. To date Rio Tinto has not agreed to these discussions.
Highlights of the combination would include:
- Combination to create the world’s premier diversified natural resources company
- Unique portfolio of large-scale, low-cost, long-life assets
- USD3.7 billion per annum in quantified synergies achieved through efficiencies and acceleration of volumes to meet strong customer demand
- Three BHPBill shares for each Rio Tinto share equivalent to a premium of approximately 28 per cent for Rio Tinto shareholders
- All share proposal gives Rio Tinto shareholders exposure to the world’s premier diversified natural resources company
- Value enhancing for BHPBill shareholders with exposure to synergies captured, strengthened asset portfolio and unrivalled future growth pipeline
- USD30 billion post-completion buy-back intended
- Cash flow and earnings per share accretive from the first full fiscal year following completion
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BHPBill's USD100 billion bid spurned by Rio Tinto
Business Day reported that BHPBill's advances have being rejected by Rio Tinto plc ("Rio Tinto"), with Rio Tinto saying that the offer of three BHPBill shares for every Rio Tinto share was to low. If the takeover goes ahead, it will be the largest acquisition in history. The Wall Street Journal said that the price tag could be more than USD100 billion. A combined entity would create a company that controls more than a third of the iron-ore market, supplies the most energy coal and copper and owns mines and oil fields in six continents. The proposed deal is also likely to spark the ire of competition authorities worldwide as a result of the market power a merged entity would have, particularly in the iron ore market.
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BHPBill -- market speculation
BHPBill confirms that it recently wrote to the board of Rio Tinto outlining a proposal in relation to a potential combination with Rio Tinto on terms incorporating a premium, reflecting its confidence in the benefits for both sets of shareholders of such a transaction. Rio Tinto rejected the proposal. BHPBill has again written to Rio Tinto and intends to continue to seek an opportunity to meet and discuss its proposal with Rio Tinto. There can be no assurance that any transaction or offer will result from the proposal.
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BHPBill wants iron ore price index
BHPBill wants to initiate an iron ore price index. According to Business Report, this will increase pressure on Asian steel mills to pay more under annual contracts, with demand set to overtake supply until 2015. A company spokesperson said that this was "something we are looking at based on our Western Australian iron ore products", but was "clearly not relevant to this year's negotiations". The new index would be used to help set annual rates and be based on cash prices.
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