Kloppers says rivals can't match Rio offer

BHP Billiton Ltd, under pressure from investors to increase its hostile $128 billion offer for Rio Tinto Group, said rivals could not match the proposal and it wouldn't speculate on making a higher bid.

"We have got a proposition on the table which is compelling," Marius Kloppers, chief executive officer of the world's biggest mining company said yesterday at a media conference in Adelaide.

"We don't think that anybody else has got the ability to replicate that."

Rio's London stock is trading at a 10 percent premium to the offer, signaling investors expect BHP to raise its bid.

Rio says the offer undervalues the world's third-largest mining company and is increasing dividends and selling assets to repel the approach.

"They have an idea on the price they are willing to pay and I imagine they wouldn't have put their best price on the table up front," said Jamie Nicol, chief investment officer at Dalton Nicol Reid in Brisbane, which manages more than A$650 million ($569 million) and holds shares in both companies.

Melbourne-based BHP fell 65 cents, or 1.6 percent, to A$41.30 at the 4:10 pm Sydney time close on the Australian Stock Exchange. London-based Rio fell 0.6 percent to A$135. It has risen 82 percent this year.

BlackRock Inc's Graham Birch, who helps manage about $14 billion in natural resources assets, told reporters on last Friday he won't be "rushing" to accept BHP's proposal. BHP could afford to add $27 billion cash to its stock offer, UBS AG said this month.

'Different views'

BHP has met with about half of both companies' shareholders and most see the logic to the deal, Kloppers said. "Different people have different views," he said in response to a question on whether shareholders he'd met supported the proposal.

"We have only got the proposition on the table that we have and I really don't want to get drawn into speculation on other than that proposal," Kloppers said. "We are very patient people."

Perennial Investment Partners Ltd, Baker Steel Capital Managers LLP and Argo Investments Ltd say BHP's three-for-one stock proposal is too low.

Kloppers may need to offer a 60 percent premium for Rio Tinto, Perennial Investment, which manages A$20 billion, said on November 11.

The combined company would control about 38 percent of iron ore exports, the same as Brazil's Cia Vale do Rio Doce, according to Australia & New Zealand Banking Group Ltd.

BHP and Rio would be the largest aluminum producer, the largest shipper of coal and supply about 6 percent of all copper.

"The bottom line here is simple, these two companies are worth more together than apart," Kloppers said yesterday in a speech to shareholders.

Bloomberg News

(China Daily 11/29/2007 page16)