The world's biggest mining company, BHP Billiton has announed it is dropping its hostile takeover bid for rival Rio Tinto, citing "concerns about the continued deterioration of near term economic conditions", particularly falls in commodity prices.
AFP - The world's biggest miner BHP Billiton Tuesday said it was dropping its hostile takeover bid for rival Rio Tinto amid the current financial crisis.
BHP chief executive Marius Kloppers said recent falls in commodity prices and other issues had altered the "risk dimensions" of the multi-billion dollar bid which would have created a mining behemoth.
"BHP Billiton is very focussed on balance-sheet strength," Kloppers said.
"Accordingly, the greater debt exposure of the combination plus the difficulty of divesting assets have increased the risks to shareholder value to an unacceptable level."
The company said the all-scrip bid, under which BHP Billiton was offering 3.4 of its own shares for every Rio Tinto share, was no longer in the best interests of its shareholders.
"While we have not changed our view of the basic industrial logic of the combination, or of the longer term prospects for natural resource demand growth driven by emerging economies, we have concerns about the continued deterioration of near term economic conditions," chairman Don Argus said in a statement.
The proposed takeover had raised competition concerns, particularly in resource-hungry Asia where steelmakers feared the merger of the world's largest and third largest miners would cede them too much control over commodity prices.
The takeover bid had already passed Australian and US competition regulators and was subject to a ruling from the European Union's antitrust regulator expected early next year.
Date created : 2008-11-25