EC puts review of BHP's $160 billion bid for Rio on hold; seeks more data

04 September 2008

Mumbai: BHP Billiton's proposed $160 billion (Australian $194billion) hostile bid to take over Rio Tinto hit another regulatory bump after the European Commission (EC) placed its review on hold and sought more information from BHP.

EC, which was expected to finalise its review of BHP's proposed takeover of Rio Tinto and hand down its decision on 9 December, has now announced that the process has been stalled for want of more information.

The news comes amidst mayhem in the commodity markets that prompted a shifting in investor focus away from mining and energy stocks.

The EC move, coming after comments by Chinalco chairman Xiao Yaqing that left open the possibility of the Chinese aluminium giant selling its 9 per cent stake in Rio under BHP's current offer, will likely hammer Rio shares further.

The EC review is now likely to extend well into the time around Christmas. That would make a decision rather difficult this year, say analysts.

The international steel industry and the Australian Competition and Consumer Commission have also voiced concern over the deal on the ground that a BHP-Rio combine would have too much control over iron ore prices.