Here’s a new one. The Australian tomorrow reports that China is set to swoop on BHP Billiton, with plans to buy up a bigger chunk in the dual-listed miner than it previously snared in rival Rio Tinto.
But tomorrow’s story got the BHP share price moving today in London. BHP Billiton shot up to the top of the FTSE gainers board as the tale of the planned stake-building spread. BHP was up almost 5 per cent as the market was closing.
The Chinese plan, said the Australian, would be another move to disrupt a deal between BHP and Rio, and is unlikely to ease tensions between China and Australia.
News of the plan – part of an attempt by China to intervene in BHP’s takeover of Rio to create one of the world’s biggest companies – follows a warning from the Prime Minister to the Chinese Government and industry that they will have to accept higher coal, iron ore and natural gas prices and cannot expect intervention from Canberra in the raw materials market.
Back in February, Chinalco lead the London dawn raid on Rio, snapping up a 9 per cent stake in the miner in cahoots with US aluminium group Alcoa.
The Australian reckons that the next move to disrupt BHP’s mega-merger plans will look different:
The plan to buy a stake in BHP is under development, with Chinese authorities yet to determine which state-owned financial institution or steel mill – such as the largest, Baosteel – might take the lead role in seeking sellers within BHP’s diverse shareholder base.
Either way, this merger meddling is an expensive business. The raid on Rio cost about $14bn. Getting hold of a larger chunk of BHP, about 10 per cent say, could add another $20bn-odd to that bill.
Related links
Dawn raid for Rio stuns BHP – FT.com, February
A complex rationale for China’s raid on Rio – FT.com, February