Sydney: The current turbulent economic situation has led the world's largest mining company BHP Billiton to step back from its takeover bid for rival Rio Tinto. " The BHP Billiton Board no longer believes that completion of the offers for Rio Tinto would be in the best interests of BHP Billiton shareholders," said BHP Billiton Chairman, Don Argus. "We have said that we would only seek to complete the transaction if it was in the best interests of BHP Billiton's shareholders.
"While we have not changed our view of the basic industrial logic of the combination, or of the longer term prospects for natural resource demand growth driven by emerging economies, we have concerns about the continued deterioration of near term global economic conditions, the lack of any certainty as to the time it will take for conditions to improve and the risks that these issues imply for shareholder value," he added.
Marius Kloppers, BHP Billiton ceo, said, "Recent global events and associated falls in commodity prices have, altered risk dimensions. BHP Billiton is very focussed on balance sheet strength. Accordingly, the greater debt exposure of the combination plus the difficulty of divesting assets have increased the risks to shareholder value to an unacceptable level."
The proposed takeover had raised concerns among numerous Chinese steel producers on the basis that the merger of the two companies would have severely reduced market choice and given the BHP a virtually unbeatable tool with which to determine price.
BHP Billiton intends to write off the costs of approximately $450m incurred over the eighteen months for expenses relating to the abandoned buyout. [25/11/08]
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