The world's biggest mining company BHP Billiton on Thursday made a startling revelation that it had made an offer to buy rival Rio Tinto, which was subsequently snubbed, laying to rest months of speculation.
The news sent Rio Tinto's stock sharply northward, shooting 26%
higher to trade at 5 497 pence a share
at 13:50.
The deal would be BHP Billiton's first significant acquisition since 2005, and would be an explosive start for new CEO South African-born Marius Kloppers, who took over from Chip Goodyear, on October 1.
Rio Tinto later stated that the offer was for three BHP Billiton shares for each of its own, which "significantly undervalues Rio Tinto and its prospects".
Later on China was reported to have started buying up a load of RIO shares, as they are afraid of the merger of companies that would essentially control iron ore prices to them.
A merged BHP-Rio Tinto would control more than one-quarter of the global supply of iron ore, a key raw material for Chinese steelmakers supplying the world's fastest-growing major economy. According to data compiled by UBS AG, China will consume 59% of the world's iron-ore production, 40% of aluminum production and 29% of refined copper by 2012.
The possible deal "definitely matters to the restructuring of ore resources. ... We are highly concerned," says Chen Ying, chief financial officer of Baoshan Iron & Steel Co., or Baosteel, China's biggest steelmaker in terms of capacity.
The world's biggest mining company BHP Billiton on Thursday made a startling revelation that it had made an offer to buy rival Rio Tinto, which was subsequently snubbed, laying to rest months of speculation.
The news sent Rio Tinto's stock sharply northward, shooting 26%
higher to trade at 5 497 pence a share
at 13:50.
The deal would be BHP Billiton's first significant acquisition since 2005, and would be an explosive start for new CEO South African-born Marius Kloppers, who took over from Chip Goodyear, on October 1.
Rio Tinto later stated that the offer was for three BHP Billiton shares for each of its own, which "significantly undervalues Rio Tinto and its prospects".
Later on China was reported to have started buying up a load of RIO shares, as they are afraid of the merger of companies that would essentially control iron ore prices to them.
A merged BHP-Rio Tinto would control more than one-quarter of the global supply of iron ore, a key raw material for Chinese steelmakers supplying the world's fastest-growing major economy. According to data compiled by UBS AG, China will consume 59% of the world's iron-ore production, 40% of aluminum production and 29% of refined copper by 2012.
The possible deal "definitely matters to the restructuring of ore resources. ... We are highly concerned," says Chen Ying, chief financial officer of Baoshan Iron & Steel Co., or Baosteel, China's biggest steelmaker in terms of capacity.
Reminisces of a Stock Operator, the bible. I read it once a year at least.
Reminisces of a Stock Operator, the bible. I read it once a year at least.
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