UPDATE: Rio Tinto shares up on China bid

Source: Exec Digital UK

Date :26/11/2007 09:16:04

Reports that China’s new state investment fund could make a counterbid for Rio Tinto has sent its shares up by seven percent.

Over the weekend, China Business reported that China Investment Corp. will team up with Baosteel, Angang Steel and Shougang Group to bid for Rio against BHP Billiton’s offer.

A BHP-Rio merger would mean that the firm would control around 70 percent of the global iron ore market along with Brazil’s CVRD, a situation China, as the world’s largest consumer of iron ore, understandably wants to avoid.

However, China Investment and the state-owned steelmakers have so far denied any knowledge of an offer.

Sales

Meanwhile, Rio Tinto prepared to defend against BHP’s approach by promising to reward shareholders with a 30 percent dividend rise and stating that it will step its global sell-off programme to £7.4 billion after the £19 billion acquisition of Alcan, the US aluminum firm.

Tom Albanese, Rio’s CEO said in a statement today: “We believe we have a better growth pipeline than our competitors, which puts Rio Tinto in a strong position to supply the metal hungry world.

“We have the people, the execution capability and resources to work smarter, faster and better than our competitors.

“We also believe our track record of delivery is unrivalled and we look forward with confidence to a hugely exciting future.”

"We are poised for exceptional growth," he added. "Why BHP may need Rio Tinto, Rio Tinto does not necessarily need BHP."

November 26, 2007