Rio boss says company worth more than BHP offer

BHP Billiton's takeover offer for rival Rio Tinto was far away from a true valuation of the smaller company, Rio Tinto's chief executive said.

Tom Albanese, in Australia for a presentation to investors, told national television that BHP Billiton's bid to create a mining behemoth was too low to be accepted and that this view was supported by the market's response.

Rio Tinto has rejected BHP Billiton's proposal of three of its shares for every Rio Tinto share - a proposal which values Rio at some $134 billion based on current share levels.

"We've seen the market move well past the BHP proposal, which we rejected, and the market to some extent is speaking," Albanese told the Australian Broadcasting Corporation.

"It's basically saying that: 'Yes, we agree it's worth a lot more'," he said.

Albanese would not put a figure on Rio Tinto's worth, but said it was "ballparks away" from the proposal put forward by BHP Billiton, the world's biggest diversified miner.

"I think I've referred to a couple of ballparks away," he said.

"I think this is all about value. The business of Rio Tinto has so much inherent value. I think it's just tremendous. I think that the proposal we received didn't recognise that value which is why we rejected it."

'Exceptional growth'

Last week Rio Tinto, the world's third-largest miner, said it was poised for exceptional growth and expected to triple its iron ore output to meet growing global demand for metals and minerals, particularly from China.

BHP Billiton has responded to Rio Tinto's rejection by saying it still hoped its rival would warm to the "irresistible logic" of its takeover bid.

"The bottom line here is simple - these two companies are worth more together than apart," BHP Chief Executive Marius Kloppers said last week.

BHP Billiton says a merged company would unlock at least $3.3 billion in synergies and cost savings and provide clients with more products more quickly through the faster development of projects and pipelines.

But Albanese dismissed suggestions there was a general consensus that the merger would bring benefits to both companies at the offered price.

"I'm not sure that I would call it a consensus," he said.

"Most of the synergies come from the Rio Tinto side of the ledger and the proposal we received didn't recognise that - so it was a pretty easy decision to just say no."

The unsolicited merger proposal would create a global giant in coal, iron ore, copper and aluminum.

Opposition has emerged from steel mills and lobby groups in Asia and Europe, who fear such a giant would have a stranglehold on the prices of raw materials.

AFP

(China Daily 12/04/2007 page16)