BHP boss says takeover offer propping up Rio shares

SYDNEY (AFP) — BHP Billiton chief Don Argus said Wednesday that his company's 170 billion US dollar takeover offer for Rio Tinto was effectively propping up its rival's share price. In a letter to Rio shareholders, Argus said the offer of 3.4 BHP shares for every Rio share was a 45 percent premium on Rio's share price. "This is a substantial premium by any measure, and one that is reflected in the large increase in the market for Rio Tinto shares, relative to BHP Billiton shares, since our proposal became public last November," he said. "Without the benefit of our offer, Rio Tinto shares would be trading very differently." BHP's share price was 43.24 Australian dollars (41.08 US) prior to its initial takeover bid in November and has since dropped 9.2 percent to close at 39.26 Wednesday. Rio shares have risen 7.1 percent from 113.40 dollars to 121.5 over the same period. Argus said he expected the regulatory processes surrounding the bid to be completed by the end of the year and urged Rio shareholders to accept the deal, which is aimed at capitalising on a China-driven resources boom. "Both BHP Billiton and Rio Tinto have world-leading portfolios of large-scale, low-cost, long-life assets that are highly complementary," he said. "In many cases, assets are either jointly owned, neighbouring or close by. "This unique overlap offers substantial opportunities to save money and add value through managing the assets as one collective group under single ownership." BHP's current 3.4-for-one share offer was originally valued at 147.4 billion US dollars but changes in share prices mean that is now valued at 170 billion US dollars, according to Dow Jones Newswires. A link-up between BHP, the world's largest miner, and Rio Tinto, the third largest, would create a behemoth leading the planet in coking coal, thermal coal, copper and aluminium production.