BHP Takeover Under Pressure

BHP seeks to buy the whole of Rio Tinto, to eliminate the competition that the originally Spanish/Australian company offers. Alcoa has stated that they don't intend to make an offer for the whole of Rio, but they reserve the right to if another made a solid bid.

Having bought a 12 per cent stake in Rio's London shares, giving them a holding of 9 per cent and over, which included the Australian listed shares; this has become the country's largest overseas investment and consequently coming days before the Wednesday deadline

BHP's offer, (worth est. £50 per share) would become the worlds second biggest take over and would create a $US317 billion company which would allow them a huge control of a range of materials, including copper, aluminum, iron ore and coal.

Rio has rejected their offer, with the offer from Alcoa and Chinalco they, (BHP) are now forced to make an even bigger offer, or walk away completely.

The Chinese government supports this movement by Alcoa and Chinalco and sees it as advancement for China. Chinalco President Xiao Yaqing told reporters: "This investment was driven primarily by our strategy to develop into a diversified metals and mining company".

Even with Chinalco and Alcoa's stake purchase, it would not block a takeover of Rio by BHP but makes it difficult now because an unwanted bid at this time would compel BHP to win more than 90 per cent of Rio to allow them to force marginal investors to sell out.