Rio chief says BHP must be like China -- pay more

Rio chief says BHP must be like China -- pay more
AFP - 41 minutes ago

SYDNEY (AFP) - BHP Billiton needed to follow China's lead and pay a substantial premium for Rio Tinto shares if it wanted to take over the world's largest miner, Rio chairman Paul Skinner said Thursday.

Skinner told Rio Tinto's annual general meeting that BHP's 147 billion US dollar takeover bid remained too low, holding up the price paid by China's Chinalco for a stake in Rio last February as representing fair value.

Chinalco and Alcoa are believed to have paid a 21 percent premium on Rio's share price when they combined to buy a nine percent stake in the Anglo-Australian giant for 14 billion US dollars.

"This is not something we solicited, but the acquisition, at a premium to the then prevailing market price, gives directional support to our view on Rio Tinto's value," Skinner told the shareholder meeting in Brisbane.

He repeated the board's original assessment that BHP's offer "significantly undervalued Rio Tinto's assets and prospects".

"The board will not engage in discussion with any party whose proposals do not fully value Rio Tinto," he said.

"This would need to reflect a significant premium to what we can achieve ourselves -- so far we have not seen that."

Skinner's comments come after BHP chief Marius Kloppers this week criticised Rio management's track record and questioned projections released in February predicting its growth was set to outstrip its rival's.

Kloppers also accused Rio of "missing the boat" on China, where rapid industrialisation has created unprecedented demand for resources.

But Skinner said Rio's presence in China and across the rest of Asia was strong.

"It is not just a China story. Other Asian economies, notably India, are poised for extended periods of growth," he said.

"We therefore remain very positive about the prospects for the industry, and for Rio Tinto in particular, given our outstanding portfolio of assets."