Rio Tinto May Be `Broken Up' Within Two Years, BlackRock Says

Sept. 18 (Bloomberg) -- Rio Tinto Group, battling a hostile $115 billion takeover bid from BHP Billiton Ltd., will probably be broken up within two years by a group including Chinese investors, BlackRock Inc. said. ``It probably won't all go to BHP,'' Richard Davis, who oversees $30 billion in global commodity equities at BlackRock's London unit, told reporters today in Seoul. ``There probably will be some sort of consortium, which will break the company up and will obviously involve the Chinese.'' Shares of London-based Rio have fallen 38 percent since Aluminum Corp. of China, the nation's largest maker of the metal, bought a 9 percent stake with Alcoa Inc. in February for 6,000 pence each. BHP Chief Executive Marius Kloppers wants the Chinese company's support for his takeover, which would create the world's biggest producer of aluminum and energy coal. ``Rio Tinto probably won't exist in a year's time or in two year's time,'' said Davis, managing director of the U.K. unit of the largest publicly traded U.S. money manager. ``The Chinese paid a lot more per share than what the price is today, so potentially that breakup could occur at 60 pounds a share or more.'' Rio, the world's second-largest iron ore producer, rose 2.6 percent to 3,746 pence in London trading. BHP, the world's biggest mining company, rose 2.3 percent to 1,320 pence. Aluminum Corp., or Chinalco, has said it bought the stake to diversify into other metals. It last month won permission from the Australian government to raise its stake in Rio to 11 percent. Kloppers this month said falling commodity prices and a slowing global economy will help convince investors to support the bid, along with the Melbourne-based company's higher profit margins and lower debt than its rivals. Rio's Chief Executive Officer Tom Albanese rejected BHP's sweetened offer of 3.4 shares for each Rio share on Feb. 6, saying the bid undervalues its assets and prospects.