BHP Files Formal Request to EU for Rio Tinto Bid

BHP Billiton, the world's largest mining company, has formally filed with the European Commission for clearance to take over Rio Tinto, a Commission list of M&A cases showed last Friday. The Commission is the European Union's executive vehicle and also the latter’s antitrust regulator, setting a deadline of July 4 for consideration of the deal, by which the Commission must either approve the deal, performing a thorough investigation, or permit a short extension. Rio Tinto rejected BHP's all-share offer shortly after BHP announced it on Feb. 6. The filing was delayed for months during pre-filing talks with the European Commission. As per analysts, the most contentious area is likely to be iron ore, as a proposed combined firm would control about one third of seaborne trade in iron ore, which is the raw material for making steel. EU steel firms have been positioned to oppose the marriage, worried a combined group would have undue pricing power over iron ore, contract prices of which have recently ramped up. There are also analysts that speculate resource-hungry China will also fight the merger and would invest into BHP as a hedge against growing commodity prices. BHP's bid for rival Rio Tinto is a prominent example of a trend in the past few years for metals and mining industry groups to buy running operations rather than start one by themselves. COPYRIGHT All rights reserved. The copying, republication or redistribution of WAM News Content, including by framing or similar means, is expressly prohibited without the prior written consent of WAM.