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Rio will come to the party, BHP Billiton chief tells meeting
Source: The age, November 29, 2007
BHP Billiton has used the forum of its packed annual meeting in
While Rio has said the rejected 3-for-1 scrip offer proposed is at least two ball parks away from what it considers to be true value, BHP managing director Marius Kloppers told the AGM there was "no doubt that investors see the logic in our proposal".
Mr Kloppers also claimed that the more sensitive issue of customer acceptance of the creation of a $US380 billion mining colossus was pretty much in the bag. He argued that some vocal customers had raised only "perceived" concerns and said BHP's job now was to "work through these issues so that the real benefits for all stakeholders is understood".
Mr Kloppers described the merger plan as "customer friendly", dismissing criticism that the proposed combination would give BHP-Rio too much market power, enabling it to push prices up.
The company was "a price taker, not a price setter", he said. "We will accept market prices."
With no end in sight to the stand-off between BHP and a defiant Rio, Mr Kloppers said BHP would be patient in its pursuit of Rio - one the market suspects could be brought to an end by BHP increasing the terms to at least a 4-for-1 basis ($165 a Rio share).
That compares with the $123.90-a-share valuation implied by the current 3-for-1 proposal.
Mr Kloppers said that for shareholders, the merger proposal was "about creating and unlocking value … a tremendous amount of value" as both companies shared common growth aims to meet growing world demand and sought to develop new mineral assets.
"But that value is gone, wasted, if the companies do not find an effective way to combine," he said.
He said there was no surprise for him in
Mr Kloppers countered yesterday by saying the "two companies are worth more put together than they are apart".
"It is not a question of us needing them or them needing us," Mr Kloppers said. "This is about unlocking value for both sets of shareholders that neither company can access on its own."