FTAlphavilleFT Alphaville is a 2008 Webby Award Winner

• News
• Markets Live

BHP Billiton has made the first move in a bid to create a natural resources giant and one of the world’s largest companies, with a takeover approach to its arch-rival Rio Tinto. Although the approach - which valued Rio Tinto at £67bn, excluding debt - was rejected out of hand, BHP is thought to be ready for a protracted campaign, and analysts said it would go hostile if necessary. BHP said it had written to Rio about a possible offer of three BHP shares for each Rio share - a 14 per cent premium to Wednesday’s closing price of £43.50. Rio, led by chief executive Tom Albanese, rejected the approach saying it “significantly undervalues Rio Tinto and its prospects”.  People close to Rio said that the offer “isn’t even close” to a level that would tempt the company into a friendly deal with BHP. Lex notes that a deal would face obstacles. China will be fuming at the prospect of two companies, BHP-Rio and CVRD, controlling 80 per cent of the planet’s iron ore. Anti-trust authorities will take convincing. But the combination also makes industrial sense.