2007/11/8 BHP Billiton

BHP Billiton notes the recent speculation in relation to a potential offer for Rio Tinto at a premium.

BHP Billiton now confirms that it recently wrote to the Board of Rio Tinto outlining a proposal in relation to a potential combination with Rio Tinto on terms incorporating a premium, reflecting its confidence in the benefits for both sets of shareholders of such a transaction. In preparing its proposal, BHP Billiton has examined in detail the regulatory issues and other practicalities of a combination.

In its letter, BHP Billiton sought to pursue discussions with Rio Tinto regarding its proposal. Rio Tinto rejected the proposal.

BHP Billiton has again written to Rio Tinto and intends to continue to seek an opportunity to meet and discuss its proposal with Rio Tinto. There can be no assurance that any transaction or offer will result from BHP Billiton's proposal.

November 8 2007 Rio Tinto

Rio Tinto rejects approach from BHP Billiton

Rio Tinto notes the recent announcement from BHP Billiton involving a proposed acquisition of Rio Tinto. Under this proposal each Rio Tinto share would be exchanged for three BHP Billiton shares.

The Boards of Rio Tinto have given the proposal careful consideration and concluded that it significantly undervalues Rio Tinto and its prospects. Accordingly, the Boards have unanimously rejected the proposal as not being in the best interests of shareholders.

Rio Tinto will continue to focus on the implementation of its well articulated strategy, including integrating Alcan operations. 

November 9, 2007 Times

Rio spurns BHP proposal to create $350bn mining giant

Rio Tinto has rejected an offer from BHP Billiton to merge the two Anglo-Australian companies and create an iron giant valued at some $350 billion (£166 billion).

A merger would create a base metals colossus with powerful positions in coking coal, iron ore, copper and aluminium. BHP's offer - three BHP shares for every Rio share, which values the bid at more than $140 billion on current prices - was rejected by Rio at a board meeting held earlier this week to consider the proposal. Rio shares gained 956p, or 22 per cent, to £52.96 in response to news of BHP's interest, while BHP fell 100p, or 5.6 per cent, to £16.56.

In rejecting the proposal, Rio said it had given it careful consideration but "concluded that it significantly undervalues Rio Tinto and its prospects". One person with knowledge of the talks said the offer was "a million miles away" from one that Rio would contemplate. "What they have put forward is a skinny premium . . . it's a long way away from the kind of value that would be sensible."

BHP's offer coincides with completion of Rio's $38 billion takeover of Alcan, the Canadian aluminium group, where Rio outbid Alcoa, the American aluminium producer.

A merger between Rio and BHP could provoke a political storm and push the mining sector to the fore-front of government concern about the emergence of cartels in strategic commodities.

The price of iron ore and coal, key ingredients in the production of steel, has soared over the past two years and a combined BHP-Rio group would command more than a third of the market in both iron ore and coking coal.

"There is going to be a lot of noise from the Japanese and Chinese steelmakers,"a leading mining analyst said yesterday.

Rio itself has been the subject of takeover speculation. Once the leader in the mining lists, Rio was overtaken in 2001 by the merger of Australia's BHP and the Anglo-South African group Billiton.

Following that deal, BHP's then chief executive, Brian Gilbertson, made an approach to Rio. It was rebuffed and Mr Gilbertson's initiative caused a rift in the BHP board that led to his departure.

Until its bid for Alcan, Rio stood aside from the past year's frenzied dealmaking in the mining sector. Analysts believed it was keeping its powder dry in the expectation of a metal price downturn.

Instead, demand for iron ore has continued to soar and a price leap of as much as 50 per cent is expected in 2008. Queues of bulk carriers are creating bottlenecks at terminals operated by BHP and Rio in Western Australia. Pricing is negotiated annually by three producers, BHP, Rio and CVRD, the Brazilian miner. BHP and Rio set prices in Asia in benchmark deals with Japanese steelmakers while CVRD negotiates with European steel mills.

Sources close to BHP suggest the company would consider iron ore disposals to satisfy competition concerns.

Nov 20, 2007 Reuters

Steel lobby to urge EU to ban Rio Tinto/BHP merger

Eurofer (European Confederation of Iron and Steel Industries), the lobby group for the European steel industry, said on Tuesday it will ask the European Commission to block BHP Billiton's plans to buy rival Rio Tinto due to competition concerns.

"We will be urging the Commission to take a negative view on it," Gordon Moffat, Eurofer Director General, told Reuters, adding that contacts with the EU executive body would be made this week.

A combined group would hold about 27 percent of the world market for iron ore.

Moffat said that such a concentration fuelled worries among European steel makers that a merged BHP Billiton and Rio Tinto would have too much leverage on pricing, which could damage the competitiveness of the industry and hurt consumers.

The International Iron and Steel Institute (IISI:国際鉄鋼協会) took a similar view.

It said in a statement on Monday that CVRD, Rio Tinto and BHP Billiton jointly accounted for more than 70 percent of seaborne iron ore total world trade.

"Any further consolidation between the big three would create a virtual monopoly in the business," IISI Secretary General Ian Christmas said.

"This merger is not in the public interest and should not be allowed to proceed," he added.

A number of steelmakers such as ArcelorMittal, the world's largest steel producer, announced plans to increase their own iron ore production to protect themselves against price increases that could result from the concentration of the sector.

By contrast, other miners have supported the controversial deal. Roger Agnelli, chief executive of CVRD said the merger of BHP with Rio Tinto would be positive for the mining industry.

CVRD bought Canada's nickel producer Inco for nearly $18 billion last year, which it says made it the world's second-biggest integrated mining company.

Last week, Rio Tinto rejected BHP Billiton's takeover proposal, which was worth $140 billion at the time, but on Monday BHP mapped out its plan, promising to hand $30 billion to shareholders via a share buyback if the deal goes through and signalling it was ready for a long fight.

日本経済新聞　2008/2/2

中国アルミ　リオ・ティントに出資
　12%、米アルコアと共同

　中国の非鉄金属大手、中国アルミ（Chinalco）と米国の同業アルコアは１日、英豪資源大手リオ・ティントの株式の１２%を取得したと発表した。取得額は約140億ドル(約１兆５千億円）とみられ、中国系企業の海外投資としては過去最大級とみられる。リオ・ティントには、英豪BHPビリトンが買収を提案している。今回の出資で海外での資源権益の獲得に向けた中国勢の積極姿勢が浮き彫りになるとともに、多くの資源を握るリオの買収合戦に発展する可能性もある。

　中国アルミとアルコアは共同声明で、現状ではリオの買収提案はしないとしつつも「買収提案をする権利を確保した」と強調、将来はリオ争奪戦に参加する可能性を示唆した。
　ただ、リオ買収には巨額資金が必要なことから、資源の寡占化を図るBHPのリオ買収を阻止するための株式取得との見方もある。
　中国アルミは同国最大手のアルミメーカーで、原料のボーキサイト採掘から地金生産まで一貫して手がける。アルミ地金の生産量は世界５位（２００６年)。
　今回、リオ株を取得したのは中国アルミの子会社であるシャイニング・.プロスペクト(シンガポール)。シャイニング社が発行する１２億ドル分の転換社債をアルコアが引き受けており、中国アルミとアルコアは事実上、共同でリオ株を取得する。
　アルコアは昨年５月、カナダの同業であるアルキャンに敵対的買収を仕掛けたが、アルキャンがリオからの友好的買収提案を受け入れたため、断念した経緯がある。アルキャンを手に入れたリオをアルコアが買収すれば、世界最大のアルミ企業連合の形成につながる。
　一方、リオはアルキャンを傘下に収めた直後にBHPビリトンから買収提案を受けた。買収提案総額1500億ドルに対し、リオ側は低すぎるとして拒否。リオは英のM&A監督機関を通じて、2月6日までに新提案を出すか、撤退するようにBHPに求めていた。他にも中国の宝鋼集団などリオ買収を検討しているとして取りざたされる企業は多い。

今回の取得価格は1株 6,000 pence　（時価に対して 21% premium）
BHP Billiton の提案は 4,431 pence 相当。

中国、資源安定調達狙う
　中国国有の中国アルミが米アルコアと組んで英豪リオ・ティントヘ出資することを決めた背景には、需要が膨らむアルミ資源を安定的に調達する狙いがある。英豪BHPビリトンによるリオの買収交渉にくさびを打ち込むことで、BHPによる世界の鉄鉱石価格の支配を阻止したい中国政府の意向も反映している。
　中国アルミの羅建川総裁はBHPのリオ買収について、「中国にかなり大きなインパクトを与える」とけん制してきた。中国の政策金融機関である国家開発銀行が中国アルミの資金調達を支援するとも報じられており、中国政府はリオヘの資本参加に大きく関与する形になる。
　中国の２００７年の粗鋼生産は４億９千万トンで０６年比16%増えた。
　BHPのリオ買収により鉄鉱石の値上がりが進めば、鋼材の価格上昇につながり、中国の産業界に悪影響を及ぼす。中国アルミの出資には、こうした状況を回避しようという政策的な思惑もありそうだ。

中国企業の主な資源企業買収や権益取得

社名	内容
宝鋼集団(鉄鋼)	豪フォーテスキュー・メタルズ・グループと豪鉄鉱石鉱山を共同開発
首鋼集団(鉄鋼)	豪オーストララジアン・リソーシズに30%出資
中国核工業集団（原子力）	ニジェールでウラン鉱区の探査、開発権を取得
中国国際信託投資（複合企業)	豪サザン・ゴールドへ出資

2008/2/1 Alcoa

Alcoa Inc. Partners with Chinalco to Acquire a 12% Stake in Rio Tinto

Alcoa Inc. announced today that it is partnering with Aluminum Corporation of China (“Chinalco”) to acquire 12 percent of the UK common stock of Rio Tinto plc. Alcoa will contribute up to $1.2 billion to the total investment.

Commenting on the investment, Alain Belda, Alcoa Chairman and Chief Executive Officer, said, “We have long believed that Rio Tinto has a world-class portfolio of assets and is very well positioned to prosper in the current mining cycle. This investment, made in partnership with Chinalco, allows us to mutually benefit from developments in the sector. We have known Chinalco for many years, dating back to our participation in the successful launch of Chalco’s IPO, and are looking forward to this new venture.”

The investment will be made through a Special Purpose Vehicle, called Shining Prospect Pte. Ltd. (“SPPL”) created for this purpose. SPPL is based in Singapore and wholly owned by Chinalco. Through its investment, Alcoa will acquire an equity stake in SPPL commensurate with its cash contribution to the investment.

About Alcoa
Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, through its growing position in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa® wheels, fastening systems, precision and investment castings, structures and building systems. The Company has 107,000 employees in 44 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com

2008/2/1 DOW JONES NEWSWIRES

Chinalco, Alcoa Build A 12% Stake In Rio Tinto

Aluminum Corp. of China Ltd., or Chinalco (ACH), and American aluminum giant Alcoa Inc. (AA) Friday said they had purchased a 12% stake in miner Rio Tinto PLC (RIO) for $14.1 billion, complicating BHP Billiton Ltd.'s (BHP) effort to take over its smaller rival.
Analysts view the move by China's largest aluminum producer by volume and its American partner as an effort to block the proposed BHP Billiton bid or to break up Rio Tinto, though the companies say that isn't the case.
Shining Prospect Pte. Ltd., a newly-created Chinalco subsidiary, said in a statement that it acquired the stake but Chinalco and Alcoa don't currently plan to make an offer for Rio Tinto.
However, it added: "Chinalco and Alcoa reserve the right to announce an offer ... or participate in an offer ...for Rio Tinto PLC."
Rio Tinto spokeswoman Christina Mills said the bid "reinforces our position that BHP Billiton has undervalued Rio Tinto."
Chinalco and Alcoa paid 6,000 pence a share for the stake, a 21% premium to Rio Tinto's 4,956 pence closing price Thursday. BHP Billiton's proposed bid would be valued at 4,431 pence a share at Thursday's closing price.
Rio Tinto Nov. 8 rejected a proposed three-shares-for-one bid from BHP Billiton as too cheap, and BHP Billiton now faces a Feb. 6 deadline, set by the U.K. Takeover Panel, to formalize or walk away from the offer.
BHP Billiton spokesman Illtud Harri said the company had seen the announcement but was making no further comment.
Chinese producers are concerned a BHP Billiton-Rio Tinto tie-up would concentrate natural resources like iron ore in the hands of dominant suppliers.
Analysts say the 12% stake would be enough to at least influence if not block BHP Billiton's bid.
"We're not looking for Chinalco or Alcoa to launch its own bid for Rio Tinto. We think they are looking to protect a potential squeeze on supplies of alumina or bauxite to the smelting community which might arise from a combination of Rio and BHP," said Fairfax IS analyst John Meyer.
Bernstein Research in a note said the 12% stake may mean that BHP Billiton's proposed bid would fall short of the compulsory acquisition requirement of more than 90%. "And if it continues with its bid, it may be left with a permanent minority partner or an expensive buyout."
Liberum Capital analyst Michael Rawlinson said it is likely Chinalco, Alcoa and the Chinese government are aiming for an ultimate break-up bid of Rio Tinto.
"While BHPB has looked to consolidate by creating a super major, the Chinese government is leading an effort to fragment the industry," he said in a note.
Chinalco President Xiao Yaqing said this investment underlines Chinalco's determination to increase and diversify its exposure to the sector and to be well positioned within this changing industry landscape.
It is the largest-ever cross-border deal involving a Chinese company, said a person with knowledge of the transaction.
Alain Belda, chairman and CEO of Alcoa, said: "We have long believed that Rio Tinto has a world-class portfolio of assets and is very well positioned to prosper in the current mining cycle. This investment, made in partnership with Chinalco, allows us to mutually benefit from developments in the sector."
Chinalco and Alcoa didn't disclose the size of each company's share in the newly acquired 12% stake. In a statement, they said Alcoa had committed $1.2 billion to Shining Prospect.
Rio Tinto shares opened 15% higher following the announcement, and at 1054 GMT, traded up 14%, or 697 pence higher, at 5,653 pence, outperforming a broadly stronger mining sector. The FTSE 350 mining index was up 7.4%.
BHP Billiton shares were up 11.2%, or 164 pence higher, at 1641 pence at 1054 GMT.

February 6, 2008

BHP BILLITON OFFER FOR RIO TINTO
BHP Billiton Announces Offer of 3.4 BHP Billiton Shares per Rio Tinto Share to Create the World’s Premier Diversified Resources Company

The Board of BHP Billiton today announced an offer for all of the shares in Rio Tinto Limited and Rio Tinto plc. The combination of BHP Billiton and Rio Tinto will create the world’s premier diversified natural resources company with a unique opportunity to unlock value for shareholders:
・ Unparalleled exposure to the same key mineral basins will create significant value by optimising production efficiencies and delivering greater volumes on an accelerated basis to meet growing demand;
・ Creation of substantial value through quantified synergies and benefits which are expected to contribute a total incremental EBITDA of US$3.7 billion nominal per annum within seven years of completion of the Acquisition;
・ Efficient development of the next generation of large-scale projects in new regions for the benefit of its customers, the communities in which it operates, and its shareholders; and
・ A world-class management and operational team with strength and depth across all levels of the organisation with a commitment to the pursuit of excellence and the highest standards in safety and sustainability and a focus on global best practice in community and the environment.

This value will only be unlocked if the Offers are successful.

BHP Billiton’s offer will deliver to Rio Tinto shareholders:
・ 3.4 BHP Billiton shares for each Rio Tinto share;
・ Approximately 44 per cent of the Enlarged Group compared with approximately 36 per cent based on the market capitalisations of the companies prior to the approach by BHP Billiton to Rio Tinto on 1 November 2007; and
・ A 45 per cent premium to the Rio Tinto share price prior to the approach.

The Offers contain a minimum acceptance condition requiring acceptances relating to more than 50 per cent of the publicly-held shares in each of Rio Tinto Limited and Rio Tinto plc. BHP Billiton also proposes a buy-back of up to US$30 billion within one year of completing the Acquisition if its 3.4 for one offer is successful.
BHP Billiton firmly believes that the combination creates value for existing BHP Billiton shareholders who will own approximately 56 per cent of the Enlarged Group. Further, cash flow and earnings per share will be accretive from the first full fiscal year following completion (after adjusting for the proposed share buyback and excluding depreciation on the write-up of Rio Tinto’s assets).

2008/2/6 Rio Tinto

Rio Tinto rejects BHP Billiton's pre-conditional offer

The Boards of Rio Tinto have given careful consideration to BHP Billiton's pre-conditional offers to acquire the whole of the issued share capital of Rio Tinto plc and Rio Tinto Limited. Under this proposal each Rio Tinto share would be exchanged for 3.4 BHP Billiton shares.

The Boards have concluded that the pre-conditional offers significantly undervalue Rio Tinto. Accordingly the Boards have unanimously rejected BHP Billiton's pre-conditional offers as not being in the best interests of shareholders.

Rio Tinto's Chairman, Paul Skinner said: "BHP Billiton's offers, while improved, still fail to recognise the underlying value of Rio Tinto's quality assets and prospects. Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto. Accordingly we are forging ahead with our strategy of operating and developing large scale, long life, low cost assets to generate significant value for shareholders".

Rio Tinto's chief executive officer Tom Albanese said: "Rio Tinto has an exceptional portfolio of assets and significant stand alone growth opportunities, particularly in iron ore, copper and aluminium. These assets and opportunities, combined with the company's strong track record for value delivery, project execution and successful exploration means Rio Tinto is very well positioned to take advantage of strong global markets and the growth in the resources industry, maximising value for shareholders."

2008/2/6

BHP BILLITON OFFER FOR RIO TINTO

BHP Billiton Announces Offer of 3.4 BHP Billiton Shares per Rio Tinto Share to Create the World’s Premier Diversified Resources Company

The Board of BHP Billiton today announced an offer for all of the shares in Rio Tinto Limited and Rio Tinto plc. The combination of BHP Billiton and Rio Tinto will create the world’s premier diversified natural resources company with a unique opportunity to unlock value for shareholders:
・ Unparalleled exposure to the same key mineral basins will create significant value by optimising production efficiencies and delivering greater volumes on an accelerated basis to meet growing demand;
・ Creation of substantial value through quantified synergies and benefits which are expected to contribute a total incremental EBITDA of US$3.7 billion nominal per annum within seven years of completion of the Acquisition;
・ Efficient development of the next generation of large-scale projects in new regions for the benefit of its customers, the communities in which it operates, and its shareholders; and
・ A world-class management and operational team with strength and depth across all levels of the organisation with a commitment to the pursuit of excellence and the highest standards in safety and sustainability and a focus on global best practice in community and the environment.

This value will only be unlocked if the Offers are successful.
BHP Billiton’s offer will deliver to Rio Tinto shareholders:
・ 3.4 BHP Billiton shares for each Rio Tinto share;
・ Approximately 44 per cent of the Enlarged Group compared with approximately 36 per cent based on the market capitalisations of the companies prior to the approach by BHP Billiton to Rio Tinto on 1 November 2007; and
・ A 45 per cent premium to the Rio Tinto share price prior to the approach.

The Offers contain a minimum acceptance condition requiring acceptances relating to more than 50 per cent of the publicly-held shares in each of Rio Tinto Limited and Rio Tinto plc. BHP Billiton also proposes a buy-back of up to US$30 billion within one year of completing the Acquisition if its 3.4 for one offer is successful.
BHP Billiton firmly believes that the combination creates value for existing BHP Billiton shareholders who will own approximately 56 per cent of the Enlarged Group. Further, cash flow and earnings per share will be accretive from the first full fiscal year following completion (after adjusting for the proposed share buyback and excluding depreciation on the write-up of Rio Tinto’s assets).

2008/5/30　　　 http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/31/cnbhp131.xml

BHP's Rio Tinto submission finds opposition

BHP Billiton finally made its long awaited submission to the European Commission yesterday and immediately faced opposition from steel producers seeking to block its plans to buy rival Rio Tinto.

The submission of documents seeking clearance from regulators sets the clock ticking on BHP's audacious takeover approach. The Commission typically takes around 20 working days to decide whether to give the go-ahead or move into a "Phase Two" process which would see the deal scrutinised in more detail.

The Commission set a deadline for consideration of July 4. By that date the Commission must either approve the deal, open an in-depth investigation, of permit a short extension.

Few in the industry expect BHP to be granted early clearance, and the company itself expects to the process to move into the next stage, which could take until the end of the year to complete.

Privately, BHP insists there are no regulatory hurdles that cannot be overcome, but steel makers wasted no time in urging the Commission to block the takeover, given the position the combined BHP / Rio would have in the iron ore market.

More on mining

Gordon Moffat, director general of European steel makers association Eurofer, said: "We can not believe that the Commission will authorise the merger of two of three mining companies which dominate almost 75pc of the world market for seaborne iron ore.

"Such market dominance increases disproportionately the pricing power of companies concerned in iron ore and coking coal on top of the huge price increases seen over the last years.

"This is not in the interest of the European steel industry which has already had to pass on huge increases in raw material costs."

Between them Rio Tinto and BHP Billiton have a market share of almost 40pc of the seaborne iron ore market at a time when iron ore prices have already increased by more than 65pc this year.

2008/7/3 Thomson Financial

BHP Billiton says US DoJ cleared proposed acquisition of Rio Tinto

BHP Billiton said the U.S. Department of Justice has cleared its proposed acquisition of Rio Tinto, meaning the world's biggest diversified resources company has in effect received U.S. approval.

'The early termination by the DoJ represents an important milestone in the progress of our merger clearances which are pre-conditions of our offer for Rio Tinto,' said Illtud Harri, a spokesman for BHP Billiton.

The acquisition still needs regulatory approval from the European Union, Australia, South Africa and Canada. The E.U. is due to announce its decision on the proposed takeover on Friday and is expected to move towards a more detailed Phase 2 investigation with a final decision not anticipated until the end of 2008 or early 2009.

Iron ore is expected to be the main focus for regulators, and steelmakers - the biggest users of the raw material - have expressed concerns over the planned combination.

BHP Billiton made a 3.4-for-1 hostile share offer for the world's third-largest miner in a deal worth an estimated $170 billion.

BHP Billiton said the DoJ and the U.S. Federal Trade Commission have granted early termination of the Hart-Scott-Rodino waiting period for the proposed acquisition and that the DoJ has concluded its review without further action. The decision allows U.S. regulators to revisit the case if new information becomes available.

'We are very pleased that we have received notice of early termination of the Hart-Scott-Rodino Act waiting period and completion of the Department of Justice merger review,' BHP Billiton chief commercial officer Alberto Calderon said.

---

July 3 2008 BHP Billiton

BHP Billiton Announces Early Termination Of HSR Waiting Period For Its Proposed Acquisition Of Rio Tinto

BHP Billiton today announced that the U.S. Department of Justice (DoJ) and the Federal Trade Commission (FTC) have granted early termination of the Hart-Scott-Rodino (HSR) waiting period for BHP Billiton's proposed acquisition of Rio Tinto and the Antitrust Division of the DoJ has concluded its review without further action.
司法省と米国連邦取引委員会が1976 Hart-Scott-Rodino法（米独占禁止強化）にもとづく待機期間の早期終了を承認

米国企業を買収する場合、クレイトン法第７a条を構成するHart-Scott-Rodino Antitrust Improvement Act of 1976に基づく届出が必要になる。

同法によると、企業買収やジョイントベンチャーのうち一定の要件に該当するものについては事前の通知を提出する必要がある。通知の提出の後、待機期間の進行が開始し、米国司法省及び連邦取引委員会は、�@調査活動を開始しない、�A限定調査を開始する、ないしは�B調査活動を開始する――のいずれかの対応を選択することになる。待機期間中、当事者は、調査活動等を行っている政府機関の許可を得なければ、取引を完成させることができない。

"We are very pleased that we have received notice of early termination of the Hart-Scott-Rodino Act waiting period and completion of the Department of Justice merger review," BHP Billiton's Chief Commercial Officer, Alberto Calderon said.

Termination of the applicable HSR waiting period satisfies part of the US merger control pre-condition to BHP Billiton's proposed offer for Rio Tinto. The offer remains subject to the pre-conditions as disclosed in Appendix I of the announcement on 6 February 2008, including that portion of the US merger control pre-condition referring to certain actions that may be brought by the DoJ or FTC.

Jul 3, 2008 Reuters

Japan antitrust watchdog can only bark at BHP

Miner BHP Billiton is expected to request Japanese approval shortly for its $170 billion bid for rival Rio Tinto, but while Japan can bark, it has little power to bite on the deal, despite being home to some grumpy big iron ore customers.

Outdated Japanese competition law will deter Japan's Fair Trade Commission from taking harsh action against BHP's unsolicited bid for Rio, lawyers say, despite strong opposition among Japanese steelmakers.

The steelmakers oppose a deal that would give one company control of a third of traded iron ore at a time of soaring prices but, with almost no Rio or BHP assets in Japan, the country has little power to enforce any regulatory block.

Japan's watchdog is instead seen working with its European Union counterpart in hopes of influencing that investigation.

"If the EU body demands BHP divestments of some key assets, Japan will do the same. If the EU moves into a second-stage investigation, Japan will follow," said Fumio Koma, a partner at law office Baker and McKenzie Tokyo.

"It would be much wiser if they could exert some influence on the EU on disposals of certain assets, to better reflect Japanese interests, rather than act on their own," he said.

Japan is home to two big steelmakers, world No.2 Nippon Steel Corp and No.3 JFE Holdings Inc. Together they account for 6 percent of global steel output.

Japanese steelmakers have joined the chorus of global peers in opposing the deal, worried that a combined group would have undue pricing power over iron ore, contract prices of which nearly doubled this year.

Analysts say battle lines are being drawn in Western Australia's Pilbara region, the world's biggest source of high-grade ore, where BHP is likely to be forced to give up key assets. Japan imports 60 percent of its iron ore from Australia.

Rio has rebuffed BHP's offer of 3.4-shares-for-one as too cheap, saying it fails to take into account its growth prospects.

BHP said U.S. anti-trust authorities have cleared its bid but sources familiar with the case say Europe is expected to announce an in-depth investigation on Friday.

STRIKINGLY ODD
Japan's fractured parliament failed this month to amend the anti-monopoly law, which would have required companies seeking a merger to submit their plan earlier, before buying shares in a target company.

Foreign companies do not have to seek Japanese regulatory clearance unless they have Japanese offices with big assets.

"Japanese law is strikingly odd among the nations feeling the impact of the possible merger of the world's two biggest miners," said Akinori Uesugi, senior consultant at law office Freshfields Bruckhaus Deringer.

Freshfields Bruckhaus Deringerは、1743年に英国で創設され、英国の中央銀行であるイングランド銀行の顧問事務所を務めるなど、世界で最も古い歴史と伝統を持つ法律事務所として発展してきた。
上杉秋則元事務総長　2006年7月入所、東京オフィスのシニア コンサルタント。。

"This is a typical case that there are affected parties here and the Japanese authorities have no means to control," said Uesugi, formerly the secretary-general of Japan's Fair Trade Commission.

BHP, which has filed for regulatory approval in Europe, the United States, Australia and Canada for its planned takeover, has said it would file an application with Japanese regulators on a voluntary basis. It has made similar applications in China and other Asian countries.

Even if the Japanese competition body demanded the sale of assets or other measures to try to preserve competition in a merger deal, it has no effective means to penalise foreign companies if they ignore such an order.

"They'll lose face if they issued an order and BHP simply ignored that," said Koma of Baker and McKenzie.

The Japanese authorities say it's a matter of compliance.

"Even if they are not penalised, top-rated companies should ensure full compliance with the Japanese law," said an official at the commission, who talked on condition of anonymity. "Or that will seriously hurt their reputation on the global market."

July 5, 2008　Times

BHP Billiton's bid for Rio Tinto investigated by EU

The European Union has begun a full investigation into BHP Billiton's proposed $170billion (£85.8billion)takeover of Rio Tinto, its rival.

The EU's competition watchdog said that there were sufficient concerns about the integration of the world's largest and second-largest miners for further study to be needed. The EU has already examined the deal for two months and will now spend another six looking into the ramifications of BHP's offer.

Rio Tinto, which has rejected the BHP approach claiming that it undervalues the company, welcomed the decision. BHP this week received regulatory clearance from the United States Department of Justice to proceed with the deal, but the EU and Australian competition reviews are considered more important.

If the EU or Australia requires BHP to divest large parts of Rio for the takeover to go through, it could scupper the deal. Should competition regulators give their blessing to the deal, Rio shareholders will have to vote on the proposal.

BHP is offering 3.4 of its shares for every one Rio share in a deal that will create a huge merged multinational company with a market capitalisation of about $350 billion.

The EU said: “Concerns arise in particular as regards the markets for iron ore, coal, uranium, aluminium and mineral sands, because the proposed takeover could result in higher prices and reduced choice for these companies' customers.”

Steel companies are particularly concerned about the proposed deal because a combined BHP-Rio would control 36 per cent of the world's iron ore - the raw material that is used to make steel.

The International Iron and Steel Institute (IISI), which is based in Brussels, has called on antitrust regulators to block the tie-up, warning that such a deal would create a “virtual monopoly” in iron ore mining.

Neelie Kroes, the EU's Competition Commissioner, said: “The recent surge in commodity prices has had a serious impact on the industries buying these commodities, their customers, and ultimately all the consumers in Europe and elsewhere in the world. In this very sensitive context any change making the situation worse could be extremely harmful.

“Therefore the commission will pay particular attention to ensure that this takeover does not adversely affect competition in Europe.”

Separately, BHP said yesterday that it had matched Rio Tinto with a near- doubling in iron ore prices, ending months of talks with steel makers.

BHP secured a 96.5 per cent increase for iron ore lumps and a 79.88 per cent increase for refined ore from China's Baosteel for 2008-09, and will roll out these price rises to other customers in Asia.

BHP's share price rose 14p to £17.63 and Rio Tinto's rose 140p to £56.

Dow Jones August 25, 2008

Chinalco Reserves Right To Increase Rio Tinto Stake

Aluminum Corporation of China Ltd., or Chinalco, has reserved the right to boost its stake in Rio Tinto Ltd. (RTP) after the Australian government approved its current holding, but analysts said Monday its ability to influence BHP Billiton Ltd.'s (BHP) US$164 billion bid for Rio Tinto now looks limited.

Chinalco, together with Alcoa Inc. (AA), revealed in February they had paid US$14.1 billion for a 12% stake in Rio Tinto's London-listed shares which equates to 9% of the total group and had lodged a voluntary application with the Australian government for approval of the stake.

Australian Treasurer Wayne Swan said Sunday the government had given Chinalco approval to acquire a stake of 14.99% in the London-listed stock of Rio Tinto, equating to about 11% of the total group.

The approval was given on the undertaking that Chinalco wouldn't boost its stake beyond this level without seeking Australian government approval and that it wouldn't seek a seat on Rio Tinto's board while its holding was below 15%.

Chinalco welcomed the approval and reserved the right to boost its stake up to the approved level.

"Chinalco wishes to thank the Australian government for the decision and Chinalco is pleased that it now has the flexibility to increase its stake to 14.99% in Rio Tinto PLC, should it choose to do so," it said in a statement.

Analysts and investors said the government's approval had been widely expected, with little expectation that the government would try to force a divestment of the shares, and that the approval would have little impact on the ongoing takeover tussle between BHP and Rio.

One person who is advising investors playing the deal for arbitrage, said the approval was no surprise and that by securing the undertakings the government had signaled the level of investment it was willing to allow the Chinese- government backed group to take.

Fat Prophets analysts Gavin Wendt said Chinalco's position was unchanged in that it had a seat at the table but no real influence.

"It may perhaps allow them to express their views on the proposed takeover a little bit more loudly given that they are a major shareholder," he said.

"But as it stands their stake isn't big enough to influence the outcome and I don't think the government is going to allow them to raise their stake from here."

Wendt said the Chinese may still seek to use the weight of their stake to highlight their opposition to the takeover and, if the deal did go ahead, they may also be hoping that the stake could give them access to any assets that had to be sold to meet competition concerns.

Chinalco President Xiao Yaqing has said the Rio Tinto stake is a strategic investment, but has also raised concerns over the BHP bid and said the Rio Tinto stake would allow Chinalco to have some say in the company's development strategy.

2008/8/25　日本経済新聞夕刊

豪州では買収相手の企業の発行済み株式の９割を取得すれば、残りは強制的に買収できる。中国アルミの出資比率が11%に高まれば、買収には中国アルミの同意が不可欠になる。

October 1 2008 MarketWatch

BHP cleared for Rio bid by Australian regulators

BHP Billiton Ltd.'s $119 billion bid for rival Rio Tinto has been cleared by Australia's competition regulator, raising the likelihood European regulators will also rule in the miner's favor, and adding to expectations the hostile takeover will proceed.
The Australian Competition and Consumer Commission said Wednesday it will not oppose the bid on competition grounds.
"The proposed acquisition would not be likely to substantially lessen competition in any relevant market," said ACCC chairman Graeme Samuel in a statement Wednesday.
"This conclusion was reached after conducting a comprehensive review of the proposed acquisition, including extensive market inquiries with a range of interested parties and careful consideration of the internal documents of the merger parties."
Analysts said the favorable ruling had been expected after the commission's preliminary views were published in August. At the time the ACCC said it was concerned the combined entity would be able to influence global supply and prices of iron ore and requested BHP supply additional information.
Shares of other miners rallied in Sydney trading Wednesday amid expectations the ACCC ruling, which examined competition issues affecting supplies to Australian consumers, would add to momentum for European Union antitrust regulators to clear the deal.
The EU body is due to report back by Jan 15. The body suspended its review in late August and requested additional information from BHP.
"It practically gives the green light for a takeover," said Jonathan Barratt, managing director of Sydney-based Commodity Broking Services.
Barratt said the chances of BHP's bid being a success were far from certain given the competing interests of various stakeholders.
"Somehow, something tells me that Rio doesn't want to see it and given Rio's relationship with China, they want it to remain pretty independent," he said.
Chinese aluminum producer Chinalco and U.S. firm Alcoa Inc. jointly own 12% of Rio's London-listed shares.
Steel makers in Asia and Europe mostly oppose the merger which will see the combined entity control more than a third of global iron ore supplies.
Under its ruling, the ACCC said it was difficult for companies to enter the ore-mining industry owing to large upfront costs, but noted there had been "significant" expansion of competitors in response high ore prices in recent times. The watchdog added that investments in new large-scale Australian operations had been supported in some cases by funds from steel makers.
There was also little chance BHP would abuse its dominant market position, the regulator said.
"The ACCC inquiries indicated that the merged firm would be unlikely to limit its supply of iron ore given the uncertainty it would face in relation to the profitability of this strategy and the risk that limiting supply would encourage expansion by existing and new suppliers as well [as] sponsorship of alternative suppliers by steel makers," Samuel said.
Samuel added that Australian steel makers are unlikely to face higher prices from any merger as they would have sufficient alternative suppliers both in Australia and abroad with access to rail and port infrastructure. In addition to domestic suppliers, Australian steel makers source iron ore from Tasmania and Brazil, among other nations.
The U.S. competition body gave partial approval to the bid in July. Regulators in Canada and South Africa are also assessing the deal. End of Story

business.smh.com.au 2008/10/05

China pleads with Europe to reject 'harmful' bid

A TOP adviser to the Chinese Government has warned that a $132 billion hostile takeover of Rio Tinto by BHP Billiton would be harmful to China and unfair to the global economy.

Xiaoye Wang 王 暁曄, a senior adviser to the State Council 国務院　and National People's Congress人民代表大会, has urged European regulators to reject the proposed takeover, saying any merger will have an impact on all Asian economies, which rely heavily on iron ore imports for steel production.

The comments come at a sensitive time for BHP Billiton, as key commodities, including oil, come under pressure over concerns of some easing in China's growth.

"In my opinion this merger [will have] a very bad impact on China," Professor Wang told a conference at Melbourne Law School at the weekend. "The BHP merger should be reviewed by the Chinese anti-monopoly agency. China is the biggest consumer of iron ore products, and 40 per cent is from Australia. After the merger there will be two competitors only. I believe this is harmful for competition."

China accounts for more than $14 billion, or nearly 20 per cent, of BHP Billiton's annual sales.

Professor Wang, who helped develop China's new anti-monopoly laws, said the Ministry of Commerce had received objections to the merger but has no regulatory jurisdiction over any transaction between BHP Billiton and Rio Tinto. "I hope very much [the] European regulators will reject it."

The Australian Competition and Consumer Commission approved the takeover last week, but it remains conditional on clearance from the European Commission, Canada and South Africa.

Analysts believe European regulators could be the biggest stumbling block. Their decision is due by January 15.

2008/11/4 AP

EU regulators object to Rio Tinto takeover

BHP Billiton Ltd. said Tuesday that EU regulators had highlighted antitrust problems with its hostile bid for rival Rio Tinto Inc. that would create the world's largest iron ore miner.

The company said it had received a statement of objections from the European Commission - a formal charge sheet that lays out how a deal may damage competition.

The EU executive said it would not comment.

Companies can try to defend the deal or alter it to win antitrust approval before regulators take a final decision to block or clear the combination.

BHP Billiton said it was continuing to work cooperatively with the European Commission and would respond to the EU to address the issues it raised.

Regulators have been scrutinizing the deal since July, saying they were worried about higher prices and reduced choice for European customers for metals and minerals.

Billiton's unsolicited takeover of Rio Tinto would combine the No. 2 and No. 3 iron miners and allow them to overtake Companhia Vale do Rio Doce, the world's largest iron ore miner.

Rio Tinto opposes the bid, saying BHP Billiton's offer undervalues it. BHP Billiton made a hostile, all-equity bid in February, then valued at US$147.4 billion, for Rio Tinto. At 3.4 BHP shares for every Rio Tinto share, the value of the deal fluctuates with share prices.

In May, European steelmakers urged EU Competition Commissioner Neelie Kroes to block the deal, saying it would create a company that could fix prices for steel's key raw material, iron ore that have surged this year.

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2008/11/4 BHP

BHP Billiton confirms that it has received a Statement of Objections 異議告知書 from the European Commission in relation to its pre-conditional offer for Rio Tinto.

BHP Billiton is continuing to work cooperatively with the European Commission and, in accordance with the established merger review process, will be responding in due course to address the issues raised.