BHP Billiton on Monday pledged to buy back $30bn of shares if it succeeds in taking over rival miner Rio Tinto, and attempted to soothe fears among steelmakers, especially in China, of the unrivalled pricing power the enlarged mining group would wield in the iron ore market. Rio on Monday repeated its rejection of BHP’s offer of three of its shares for every one Rio share, and said its shareholders supported its rejection. But in an appeal directly to shareholders, BHP published details of its offer and set out the logic for the takeover, which it said was “unrivalled”. Lex says that less than half the claimed benefits are genuine cost savings and that BHP’s shareholders “should not leave such whopping synergy forecasts unchallenged”. The bottom line, it says, is that BHP’s cost synergy targets are not large enough to justify a much higher bid.

This entry was posted by Gwen Robinson on Tuesday, November 13th, 2007 at 5:38 and is filed under Capital markets, M&A. Tagged with bhp billiton, rio tinto. Edit this entry.