Thursday, November 8, 2007

Rio Tinto could fetch over $170 billion - analysts

From the Guardian:

Global miner Rio Tinto Ltd/Plc could cost more than $170 billion if it is taken over, analysts said on Friday after it rejected a bid worth $140 billion from bigger rival BHP Billiton.
Few were willing to speculate on a fair price for Rio, but analysts said it could be more than A$150 a share as BHP Billiton Ltd/plc would be able to generate huge savings from putting the two companies together.

"Certainly what the market would be expecting is perhaps a prospective transaction value which could be above where the shares are today," said FW Holst analyst Rob Craigie.
Rio Tinto shares rose as high as A$138.10 a share in early Australian trade and last traded up 16 percent at A$131.82.

Credit Suisse reinstated coverage of Rio Tinto on Thursday ahead of the bid announcement with a target share price of A$135, and said any takeover bid could push the price much higher.
"However, be mindful that any corporate push could open the flood gates to a number well north of A$150 a share, in our view," Credit Suisse analysts said in a note.

BHP Billiton and Rio Tinto have the world's second- and third-largest iron ore operations based in Western Australia's Pilbara region, which together would give them more clout in negotiating sales and managing costs.

They also could reap savings from their aluminium and coal businesses besides head office costs in London and Australia.

"The synergies are huge," said Tim Barker, an analyst with fund manager BT Financial Group....MORE