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華夏之聲 發表於 2007-11-9 11:44 | 只看該作者 回帖獎勵 |倒序瀏覽 |閱讀模式
BHP Billiton Bid For Rival Driven By Mining Boom

November 9, 2007


The world's largest mining company made a bold $142 billion bid for one of its biggest rivals, in the latest sign of how historic global demand for commodities from iron to gold is consolidating control of the earth's natural resources.

The move by BHP Billiton was rebuffed by its target, Rio Tinto. But BHP signaled it will step up its pursuit and might sweeten its terms. The proposed deal would be the second-largest ever by value after Vodafone PLC's $172 billion acquisition of Mannesmann AG in 1999.

The bid marks a showdown of two new, aggressive chief executives. BHP's 45-year-old chief, Marius Kloppers, started in the top job just a month ago. Rio Tinto Chief Executive Tom Albanese was in only his second month on the job when he made a strike in July for Canadian aluminum giant Alcan Inc. Rio Tinto completed the final phase of the Alcan acquisition yesterday -- just as Mr. Kloppers was making his announcement.

DEALS & DEAL MAKERS



Check out our new Deals & Deal Makers page, offering breaking news, analysis, video commentary, and Deal Journal, The Wall Street Journal's up-to-the-minute blog on the world of deal making.The mining industry has undergone a wave of mergers in recent years as commodity prices have risen and the cost of extracting and shipping metals has skyrocketed. Fast growth in China and elsewhere is stoking demand for copper, iron ore and aluminum. Meanwhile, bottlenecks at ports and railroads are constricting supply. A merger could allow a combined BHP-Rio Tinto to better manage logistics of getting products from mines to factories. The deal is likely to face antitrust scrutiny in the U.S. and Europe.

The combined company's operations would span the globe from the outback of Australia to Madagascar to Alaska. It would become the world's largest producer of copper and aluminum, according to CRU, a United Kingdom research firm. It would also be the second-largest provider of iron ore, a key steelmaking ingredient, behind Brazil's Companhia Vale do Rio Doce, according to Raw Materials Group, a research firm in Sweden. It would also sell diamonds, uranium and coal. It would have more than $70 billion in annual sales and about 115,000 employees.

Rumors of a BHP takeover of Rio have been swirling since September, after Alcan shareholders approved its sale to Rio, and Rio shares have climbed steadily ever since.

Yesterday, Rio shares in London surged 22% to £52.96 ($111.29), about 7% above BHP's proposed bid price. BHP sank 5.7% in London trading to £16.56. Other miners also rose sharply on the news. Anglo American PLC shares shot up 15% in London.

Pressure's On

"It's going to be hard for Rio Tinto to remain independent. You saw a huge reaction in the market today," said Wayne Atwell, a former Morgan Stanley mining analyst who now heads a hedge fund focusing on natural resources. "The pressure's now on for Rio Tinto to either find a new partner or come to terms with BHP."

Before the recent commodity boom, mining companies such as BHP, based in Melbourne, Australia, and London-based Rio Tinto were managed conservatively. They had been burned by big downturns in commodity prices and the fading of heavy industry in Europe and the U.S. People familiar with the matter say BHP executives explored a deal with Rio four years ago, but the idea fell through.


Today, the need to restrain costs makes a deal more attractive, but it won't happen without a fight. Rio said its share price is low compared with rivals and the benefits from the Alcan deal are yet to be realized, making BHP's offer unattractive. A Rio spokesman said the board reviewed BHP's proposal and unanimously rejected it. He said Mr. Albanese declined to comment.

Letter 10 Days Ago

BHP sent Rio a letter 10 days ago proposing an acquisition, people familiar with the matter said. In its announcement, BHP offered three of its shares for each of Rio's. A spokesman said Mr. Kloppers declined to comment.

When BHP reported results Oct. 25, Mr. Kloppers said publicly he didn't plan any changes in strategy. Yesterday, a BHP spokesman said BHP's strategy has been to be opportunistic with investments and acquisitions.

New Discoveries

A combined BHP-Rio Tinto wouldn't necessarily lead to new discoveries of minerals, but it could help the companies cushion the rapidly rising costs of transporting metals and other raw materials. These costs are at or near all-time highs. Bulk ships are in short supply because of the surging volume of trade involving China, India and other developing nations.

BHP spelled out the potential for transportation synergies in its letter to Rio, according to a person familiar with the unsolicited bid. By combining, the companies wouldn't have to compete for ships, port time and rail shipments.

Analysts say that recent mining deals have performed well, as the high price of commodities has allowed buyers to pay down debt associated with their acquisitions quickly. The deal boom includes BHP's purchase of Australia's WMC Resources in 2005. The losing bidder, Xstrata of Switzerland, turned around and bought Falconbridge, a Canadian nickel mining company, last year.

The Deal Rush

Left out of the deal rush is Alcoa Inc., once the undisputed heavyweight in the aluminum industry. It was outbid for Alcan by Rio Tinto.

A big factor behind the deals has been China. As it has grown into the world's leading manufacturing economy, it has become the largest customer for BHP and Rio Tinto. China is both the largest producer of steel and largest user of steel, importing increasing amounts of iron ore, the mineral used to make steel. BHP's sales to China of iron ore, base metals, aluminum and other raw materials grew by nearly 50%, to $5.3 billion, in the second half of 2007 compared with the same period a year earlier. China now buys 12.5 times as much from BHP as it did in the beginning of 2003.

If BHP can acquire Rio Tinto, "ongoing strong Chinese demand will allow BHP to control supply and maintain higher prices for a longer time," said James Moir, head of Asia at brokerage firm Churchill Capital.

A Close Look

A BHP-Rio Tinto deal would likely get a close look from European antitrust regulators, particularly given the overlap in the market for iron ore transported by ship. The European Union has stepped in during previous merger talks to ensure that no company controls too much of the market for particular commodities.

Jonathan Todd, a spokesman for the EU's competition commissioner, declined to comment on the BHP bid for Rio Tinto.

U.S. antitrust officials in either the Justice Department or the Federal Trade Commission would likely review the proposed deal, particularly if it limits choices for U.S. buyers of raw materials, such as steelmakers.

"The important thing, in a deal such as this, might be to identify if there are U.S. customer groups that may be concerned by the impact of this going through," said Lisl J. Dunlop, antitrust lawyer at Shearman & Sterling LLP.

BHP said it had "examined in detail the regulatory issues and other practicalities of a combination." Rio's rejection didn't mention any possible antitrust issue.

People familiar with the two companies said in the event of a merger, competition authorities would likely force them to sell some iron mines to prevent overconcentration in the iron-ore market. An auction of iron-ore mines would likely draw interest from other global mining companies as well as national steel companies in India, China, Russia and elsewhere.

Defining Moment

The proposed deal could be a defining moment for the two CEOs. Both men have risen up through the industry, with Mr. Kloppers, a former McKinsey & Co. consultant, last running BHP's nonferrous-metals unit. Mr. Albanese has spent his career in mining after graduating from the University of Alaska with a degree in mineral economics.

Mr. Kloppers, a South African, is known for his intense personality. He replaced Chip Goodyear, an American who expanded BHP through a series of increasingly large mergers and acquisitions.

Mr. Albanese, who is from New Jersey and has been called a Bill Clinton lookalike, joined Rio Tinto after it acquired a smaller mineral company he ran, Nerco, in 2003. Since becoming Rio Tinto's CEO in May, the silver-haired, nattily dressed Mr. Albanese has been traveling the world, meeting officials in China, Russia and Mongolia and trying to negotiate mining rights in countries that are fiercely protective of their resources.

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 樓主| 華夏之聲 發表於 2007-11-9 11:50 | 只看該作者
本人今年兩次買BHP。昨天一早又買,有點倒霉,是這個消息出籠前買的,所以兩天來降了近9%。
不過我長期看好BHP。反正中國要建高鐵、高公、高樓、高霸、高GDP的,需要鋼鐵銅鋁等太多,自己有的又太少。
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