Tuesday, November 20, 2007

BHP boss claims merger with Rio has bilateral shareholder support

image BHP Billiton claimed yesterday that shareholders were supportive of its proposed mining mega-merger with Rio Tinto.

Marius Kloppers, the head of BHP, said that the investors in both Rio and BHP he had met so far had been broadly supportive of the rationale behind the deal.

He was speaking in South Africa, which he is visiting as part of a global roadshow to sell the group’s proposed £74 billion merger with its Anglo-Australian rival.

image Mr Kloppers said that he had met around half of Rio’s UK shareholders and “slightly less” of its Australia-based investors.

“Shareholders own companies, not management, and they’ll eventually tell management what to do,” he said.

He added that BHP would “continue to seek engagement” with Rio Tinto’s board.

However, people in the Rio camp rejected Mr Klopper’s comments.

The company is understood to believe that it has the backing of its shareholders in its rejection of BHP’s three-for-one share offer.

About 60 to 70 per cent of BHP shareholders also hold stakes in Rio Tinto.

Rio is preparing to respond to Mr Kloppers’s investor charm offensive with a formal defence of its decision for rejecting as too low the proposed tie-up.

It is to use an existing iron ore seminar on November 26 to explain its rationale to shareholders.

Tom Albanese, the Rio chief executive, is expected to focus on alleged “hidden” assets, such as the company’s develpoment pipeline, which, he will say, are not reflected in the business’s present valuation.

The combination of the two groups would create a natural resources giant worth more than $350 billion (£171 billion), with leading positions in the iron ore, copper, aluminium and coal markets.

However, any proposed merger is likely to meet a series of regulatory challenges in the United States, Europe and Asia.

BHP claims that the deal would create savings of $3.7 billion annually.

Rumours that Rio was looking at turning the tables and mounting its own bid for BHP have been rejected by people close to the group.

However, it is thought to be examining potential “white knight” deals with other mining companies.

Titanium Resources Group, the AIM-listed, Sierra Leone-focused mining group, will announce today that it is to double production of the rutile whitening pigment used for paints and sunblock cream.

Its enlarged mine in the West African country still recovering from a decade of civil war will account for nearly one quarter of the world’s production of the titanium dioxide residue.

BHP boss claims merger with Rio has bilateral shareholder support - Times Online