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Rio deal ‘lifted by falling prices
Bill Condie9 Sep 2008
Mining giant BHP Billiton's prospects of pushing through its $121.5 billion (£69.5 billion) hostile takeover of Rio Tinto are improving with falling commodities prices, the company's chief says.
Marius Kloppers says BHP's higher profit margins and lower debt than its rival will swing investors behind his bid.
The expected cost savings of $3.7 billion are also more valuable as commodity prices decline, he said.
Rio Tinto has rejected BHP's sweetened offer of 3.4 BHP shares for each of its own, saying the bid undervalues its assets and prospects. It has embarked on a round of acquisitions and production ramp-ups.
BHP has to borrow a $55 billion to pay for the deal and will buy back as much as $30 billion in stock.
“If you purely look at completing the deal, the worse the economic cycle, the better for us,” Kloppers said in New York.
