This was one of those stories that went on so long, you were surprised when you heard about it and realised it still hadn’t been. But it took the end of the commodities cycle and the collapse of the global economy to end the courtship of base mating dance of BHP Billiton and Rio Tinto. Technically BHP’s hostile offer is only a year old, but talks predate that by several months. Bloomberg has a good timeline of the events.
When every commodity was soaring, it made sense for BHP to offer a huge sum:
WSJ: The proposed deal had dragged on since November 2007, when Rio Tinto spurned the advance, saying the all-stock offer — worth $142 billion at the time — undervalued the London-based company.
BHP said it understood that European antitrust regulators would have forced the miner to divest iron ore and metallurgical coal assets to get the deal approved. “In the normal range of economic conditions, BHP Billiton would have been prepared to offer remedies [to the European Commission], which we believe would have been both acceptable and manageable,” BHP said.
“We’ve noted the statement,” Rio Tinto spokeswoman Amanda Buckley said. “We hope to have a full response a little later.”
BHP shares opened 20% higher in London, while Rio Tinto shares fell 40%.
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