Rio Tinto, the world’s third-largest resources group, has played its trump card in its battle to maintain its independence in the wake of BHP Billiton’s hard-sold merger proposal by calling on the United Kindom’s Takeover Panel to set a deadline for a formal offer.
By triggering the so-called “put-up-or-shut-up” clause contained in British takeover laws, Rio Tinto is effectively issuing BHP Billiton with an ultimatum to either formalise its $134-billion three-for-one all share offer or back off.
Britain’s so-called “put up or shut up” laws stipulate that a company subject to a proposed offer may request that the Takeover Panel impose a time limit for the would-be buyer to clarify its intentions.
It is just a month since BHP Billiton made its intention to create a $400-billion resources super major public, and following visits to customers and investors the world over, no formal offer has yet been tabled.
“Rio Tinto confirms that it has applied to the UK Takeover Panel Executive for a ruling under Rule 2.4(b) of the UK Takeover Code in relation to the proposal by BHP Billiton to acquire Rio Tinto, as announced by Rio Tinto on 8 November 2007,” the company said in a statement.
If the rule is triggered, BHP would need to either make a firm offer within a designated period -‒ typically one or two months -‒ or declare the deal dead.
If it withdraws, BHP would need to wait at least six months before it would be allowed to return with a firm bid or another proposed offering.
BHP Billiton’s bid as it stands has not convinced Rio Tinto to come to the negotiating table.
Rio Tinto chief executive Tom Albanese late last week said BHP Billiton’s proposal was “dead in the water”.
Its latest move may be prematurely pressurising BHP Billiton to clarify its intentions while it may have waited until it had secured more market support its proposal before pushing ahead.
Australian analysts also felt that BHP Billiton would have to up its offer to something closer to four-for-one if it wanted to get the talks under way.
BHP Billtion, in the meantime, has indicated that it will wait for the UK Takeover’s Panel to act on Rio Tinto’s request before commenting further.
But BHP Billiton spokesperson Samantha Evans was quoted as saying that BHP Billiton remained committed to what it believed was a logical and compelling proposal.
“We’d still like Rio Tinto to engage with us,” Evans said.
Both Rio Tinto and BHP Billiton have dual listings in the UK and Australia.
At 10.30am BHP Billiton’s shares were trading 83 cents up at R230,15 on the JSE. – I-Net Bridge