Sydney: Resources giant BHP Billiton said Wednesday it still hoped rival Rio Tinto will warm to its uninvited takeover bid, despite opposition from customers who fear it will lead to a stranglehold on prices.
BHP chief executive Marius Kloppers told the company’s annual meeting in Adelaide that company executives had been arguing the case for the tie-up with customers and investors around the world for the past two weeks.
“The bottom line here is simple — these two companies are worth more together than apart,” he told shareholders.
“It is not a question of us needing them or them needing us.
“This is about unlocking value for both sets of shareholders that neither company can access on its own.”
Kloppers said many have already warmed to the proposal.
“Many already see the logic of our proposal and the benefits of more product to market, more quickly,” Kloppers said.
“We remain hopeful that Rio Tinto will engage with us on this important proposal which is about creating additional value for shareholders of both companies.”
Rio Tinto has rebuffed BHP’s proposal to merge the world’s third biggest and largest miners respectively, which would create a 350-billion-US-dollar behemoth, saying it did not reflect the group’s real value.
The proposal from BHP of three of its shares for every Rio Tinto share values Rio Tinto at about $124 billion.
BHP chairman Don Argus told the meeting the short term outlook for commodity prices was strong, and that the proposed merger with Rio Tinto made “strategic and economic sense for both our two companies and makes sense for our customers”.
Opposition has emerged from steel mills and lobby groups in Europe and Asia, and in an unusual move, a Chinese government spokesman has joined the critics.
“The combining of two companies is supposed to be a business activity, so we don’t normally pay close attention to it,” spokesman Qin Gang told the Australian Broadcasting Corporation in a report from Beijing.
“But what we care about is the issue of price in the international resources market. We want the marketing price of international resources to reflect supply and demand market rule.
“The price should be long-lasting, stable and beneficial to everybody, not just exporting countries.”
China is one of the largest buyers of Australian iron ore, which is vital to the huge Chinese manufacturing sector.
In Australian trading BHP Billiton shares were down 77 cents or 1.84% at $41.18 at about 2:15 pm, while Rio Tinto shares were down $1.10 or 0.81% at $134.65.