Investing
Two Deals Could Help BHP Billiton (BHP) Bag Rio Tinto (RTP)
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At first, the offer by mining giant BHP Billiton (BHP) to buy Rio Tinto (RTP) looked improbable. The $140 billion price seemed quite rich and offering an all stock arrangement might not be attractive to the RTP board and shareholders.
BHP is moving quickly to remedy that. Citigroup (C) has lined up a $70 billion credit facility to help the takeover along, according to the FT.
A second play by BHP management could help finance a hostile run at Rio Tinto, if that is what is necessary to get a deal done. The Times of London is reporting that BHP is looking at selling its petroleum division for $40 billion. The paper writes "BHP’s financial advisers, Goldman Sachs and Citigroup, are understood to have already flown out to China to sound out potential bidders for the subsidiary."
Between the two initiatives, BHP most likely has the resources to make the takeover work. The Vegas odds are beginning to tip in its favor.
Douglas A. McIntyre
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