BHP Billiton, the world's biggest mining company, sweetened its takeover bid for rival Rio Tinto today to $147.4 billion, but its proposal was again rebuffed.
Amid reports that Rio Tinto could become the centre of a bidding battle, the company's management rejected the BHP offer as 'not being in the best interests of shareholders.'
Anglo-Australian BHP had earlier offered to exchange 3.4 of its own shares for each Rio Tinto stock, an improvement on its previous three-for-one offer that had also been rejected as inadequate. Analysts suggest the group might have to raise its offer to at least four-to-one to win over a sceptical Rio Tinto board.
BHP Billiton said the combination would help to meet rising demand from resource-hungry China, but the proposed tie-up has raised concerns in Beijing because of the market power of a merged group.
Last week, state-owned Chinese aluminium giant Chinalco teamed up with US-based peer Alcoa to buy the equivalent of 9% of the group for about $14 billion.
The move was seen by analysts as an attempt to thwart a BHP takeover and The Times reported today that the Chinese group and Alcoa may make a counterbid for Rio Tinto.
There has been speculation among market traders that Chinalco is looking to buy Rio Tinto to break the company up and that Alcoa would take Rio Tinto's Alcan aluminium assets.
A link-up between BHP and Rio Tinto, the world's third-largest mining group, would create a behemoth leading the planet in coking coal, thermal coal, copper and aluminium production.
The increased offer by BHP overshadowed a separate announcement by the company that its net earnings fell 2.4% in the six months to December, representing the Anglo-Australian giant's first profits fall in five years.
The group reported that profit in the six month period fell to $6.017 billion. It blamed rising costs and adverse exchange rates for the first profits fall since its 2002-2003 interim result.
But it remained upbeat about the outlook for commodity prices, saying Asian economies led by China and India 'have shown little sign of slowing' despite recent global economic woes.
