BHP Billiton Ltd. formalized its unwelcome takeover bid for Rio Tinto today and upped the stakes with an all-stock offer worth $147.4 billion that would create a global mining monolith.
London-based Rio Tinto, which rejected an initial approach from BHP Billiton last year as too low, said it would consider the new offer and urged its shareholders not to act hastily.
BHP Billiton is offering 3.4 of its shares for every Rio Tinto share, an increase from the initial informal proposal of 3-for-1, the Melbourne, Australia-based company said. The offer applies to both companies in the Rio Tinto Group, the Australian-listed company Rio Tinto Ltd. and British-listed Rio Tinto.
Analysts said that if the deal succeeds it would be the biggest takeover in the mining sector and one of the biggest ever in the corporate world. BHP Billiton already is the world's largest diversified mining company, and Rio Tinto is the third largest.
Steelmakers in China, Japan and Europe have protested BHP's bid for Rio Tinto, contending that a takeover would give it too much influence over global iron ore supplies and pricing.
The deal would be subject to regulatory approvals in Australia, the United States, Europe and elsewhere, and to 50% shareholder approval.
Rio Tinto Chairman Paul Skinner said the company would carefully consider BHP Billiton's latest offer and asked shareholders not to take any action yet.
BHP Billiton's approach to Rio Tinto was complicated last week when Aluminum Corp. of China and Alcoa Inc., which is based in Pittsburgh, bought a 12% stake in Rio Tinto's London-listed stock, which equated to a 9% stake in the whole group.