KEY POINTS:
BHP Billiton will this week attempt to persuade key Rio Tinto shareholders to back its US$140 billion ($185 billion) takeover plan, rejected last week by Rio's board, a source close to the deal said.
Chief Executive Marius Kloppers may take the unusual step of contacting the larger shareholders personally in the hope of selling the merits of the three-for-one offer and forcing fresh talks with the Rio board, the source said.
Analysts are divided on whether Rio's board is looking for a cash-or-scrip-sweetened alternative proposal from BHP, or is instead aiming to keep the predator at bay.
Fuelling speculation that BHP remains on the hunt for Rio, BHP has also dispatched its advisers, Citigroup and Goldman Sachs, to arrange US$70 billion in debt refinancing.
Kloppers' pitch could be easier given that 60 per cent of Rio Tinto shareholders reportedly hold BHP stock. A formal roadshow to promote the proposal is planned further down the track.
BHP hopes to draw Rio Tinto back into fresh talks but has so far not had a response to its requests to talk. Sources have said Rio's board is open to a higher BHP approach, particularly if it involves a cash component, and other offers.
"It seems they [BHP] are open to a bid but they just think the price is too low ... [Rio] are wanting to have a conversation with them to talk about the bid, talk about the synergies, talk about the rationale," the source said.
BHP was targeting annual cost savings of at least US$3.5 billion from a merger, the Australian Financial Review newspaper reported. Most of the savings would come from rationalising port and rail infrastructure in the Pilbara iron ore mining region of western Australia, it said.
A BHP spokeswoman yesterday declined to comment.
Rio on Thursday rejected BHP's offer pitched at a premium of about 14 per cent of Rio's Australian share price at the time, saying it was too cheap. Rio itself this year was forced to pay a 65 per cent premium to acquire Canada's Alcan at a cost of US$38 billion.
British newspapers reported over the weekend that BHP may be considering selling its petroleum business for US$40 billion to help fund a Rio bid, while it has also lined up a US$70 billion financing package.
- Reuters
