Tuesday, November 25, 2008

Mining: The sun sets on BHP's bid

An audacious attempt by BHP Billiton to get control of Rio Tinto has fallen apart

BHP BILLITON’S boss, Marius Kloppers, wasted no time leaping into action when he took charge a little over a year ago. In November 2007, barely a month into his tenure as chief executive of the Anglo-Australian mining giant, he began making unwanted advances to Rio Tinto, a vast rival, in the form of a proposed all-share bid that was valued at some $140 billion. After a year of politely but firmly reiterating the merits of the huge deal and several months into painstaking antitrust investigations by the European Union, however, his company has sprung another surprise, deciding to drop its bid, now valued at $66 billion.

The giant mining company admits that the crippling credit crisis and a deteriorating world economy mean that now is not the right time to pursue one of the world’s biggest takeovers. So a year of effort and $450m of shareholders’ cash, the cost of dropping the chase of Rio, have yielded nothing. The decision to quit may pain the ambitious Mr Kloppers, but the reasons for doing so had been mounting steadily. ...