BHP to Rio Tinto holders: We boosted your shares

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Jul 2008

Rio Tinto's shares would be trading at a lower price without the benefit of his company's offer, BHP Billiton Chairman Don Argus contended Wednesday in a letter to Rio Tinto shareholders. Argus wrote that BHP's announced in February represented a "substantial premium" of 45% to the latter's shares in London and Sydney. The offer "is reflected in the large increase in the market price for Rio Tinto shares relative to BHP Billiton shares since our proposal became public last November. Without the benefit of our offer, Rio Tinto shares would be trading very differently," Argus added.
In February, BHP offered 3.4 of its shares for every Rio Tinto share. Rio's board has already rejected that offer.
Argus wrote that as shareholders in the combined company, Rio shareholders "will be the beneficiaries of strong demand, tight supply and high commodity prices," and that BHP believed its proposed transaction "makes enormous sense."
Argus' letter helped lift shares of both companies in Sydney afternoon trading Wednesday, with Rio stock gaining 2.4% and BHP advancing 2.5%. The benchmark S&P/ASX 200 index rose 2% to 4,945.80.
Shares of both the Anglo-Australian resource giants have outperformed the broad Sydney market so far in 2008, with Rio Tinto stock dropping nearly 9% and BHP losing about 2.3%, while the S&P/ASX 200 has shed nearly 22% in the same period.
Argus wrote that BHP has, over the last two months, made all the regulatory filings to competition authorities whose approval is required for a merger.
"We expect that the various regulatory processes will be completed by the end of 2008, after which we should be in a position to send the offer documents to you," he wrote, adding that he will continue to update them on the offer as it proceeds.

Source: MarketWatch