Rio Holders May Vote Against BHP Iron Ore Venture, RBS Says

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30 Jun 2010

Rio Tinto Group shareholders may vote down a proposed iron ore venture with BHP Billiton Ltd. because of the terms of payment, Royal Bank of Scotland Group Plc said.

“We continue to believe that Rio shareholders will not vote for the joint venture under the current payment terms,” RBS analyst Lyndon Fagan said yesterday in a report after meeting with Rio’s Chief Executive Officer Tom Albanese. “The iron ore joint venture synergies were acknowledged, but no comments on a potential change in structure of the equalization payment were provided.”
BHP agreed to pay Rio $5.8 billion to equalize its contribution of assets to the venture. Rio and BHP, the world’s second-and third-largest iron ore exporters, plan to combine mines, railroads, ports and workforces in Western Australia in a 50-50 joint venture to save at least $10 billion.
The deal needs shareholder and regulatory approval and is opposed by steelmakers in Europe and Asia.

Source: Bloomberg