Mumbai: BHP Billiton, the world's largest mining company, has launched a sweetened $147.4 billion bid for London-based rival Rio Tinto.

In the world's largest-ever take-over bid, Melbourne-based BHP sweetened its earlier offer of 3 shares for every Rio share to 3.4 shares for each share of Rio, the company said in a statement.

BHP said Rio shareholders would hold 44 per cent of the merged entity, compared with 36 per cent in the earlier proposal.

Rio had rejected BHP's original three-for-one all-stock offer made on November 8 as it "undervalued" its mines and growth prospects. (See: BHP Billiton may have to offer a 60-per cent premium for hostile takeover of Rio Tinto)

A combination of the world's top two mining companies would create the world's third richest company, with a market capitalisation just below Exxon Mobil and General Electric.

BHP, however, needs support of at least 50 per cent of shareholders of both Rio's Australian and London units for a deal.

The acquisition of a nine per cent stake by Chinalco, which teamed up with Alcoa Inc (to buy a 12 per cent of Rio may also complicate BHP's task.

Chinalco and Alcoa, with possible funding from China Development Bank, have reserved the right to make an offer for Rio if there was another bid.

While Rio Tinto has long been opposed to BHP's takeover moves, customers of both companies, particularly steel mills in China and Japan, have also raised concerns about the merged group commanding a monopoly in the market.

Rio, however, said it was considering the offer and advised its shareholders not to take any action.

The current offer is at a 45 per cent premium to Rio's stock price in November before BHP first proposed a three-for-one share swap. 

BHP, faced by higher input costs and unfavourable foreign exchange movements, saw its first-half profit fall 2.4 per cent to $6.017 billion, although underlying earnings before interest and tax rose 5.4 per cent to $9.6 billion.

The group posted record half-year results in its iron ore, petroleum and manganese businesses.

BHP also lifted its interim dividend to 29 cents a share, up 45 per cent year-on-year.

BHP said it is its first offer, meaning it is not the final one and the company is open to improving the offer.

BHP chief executive Marius Kloppers said he had not spoken with the Rio board before making the offer, but said the offer may get wider support among Rio shareholders, 60 to 70 per cent of whom also hold BHP shares.