European steelmakers yesterday warned they were gearing up to fight BHP Billiton's attempts to take over rival miner Rio Tinto, as Rio's board rejected a revised $147 billion all-share offer from the world's biggest mining company.
Eurofer, the European Confederation of Iron and Steel Industries, said it had already prepared a preliminary file detailing its concerns for the European Commission's competition department, and held an exploratory meeting with a commission team to look at issues raised by the combination.
One of Eurofer's main concerns is that, if the merger went through, about 80 per cent of the world seaborne trade in iron ore would be in the hands of two rather than three companies, which it claims would have implications for pricing power.
BHP now faces what is likely to be a protracted hostile takeover battle.
Hours after it set out its new offer of 3.4 BHP shares for each Rio share, Rio Tinto's board announced that it unanimously rejected the bid.
Paul Skinner, Rio chairman, said: "BHP Billiton's offer, while improved, still fails to recognise the underlying value of Rio's quality assets and prospects. Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto."
BHP approached Rio last Nov ember with an offer of three BHP shares for each Rio share. Rio's chief executive rejected this as "several ball-parks away".
BHP argued yesterday that its revised offer represented a 45 per cent premium to Rio's share price before BHP's first approach. BHP chief executive Marius Kloppers said the fundamentals of Rio's business "do not support anything like the current [ Rio] share price".
BHP shares fell 4.8 per cent to £15.20 yesterday, valuing its new offer at £51.68. Rio's shares closed down 0.3 per cent at £54.17.
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