BHP Billiton launches formal takeover bid for Rio Tinto

Mining giant BHP Billiton Ltd. launched Wednesday a formal takeover bid for its smaller rival Rio Tinto Ltd.

Valued at $147.4 billion, it is the biggest-ever mining takeover offer in history and, if successful, will create the largest resources company in the world.

Melbourne-based BHP is offering 3.4 of its shares for each Rio Tinto share, an improvement on an informal three for one proposal the mining firm made in November.

The bid is conditional on a minimum acceptance of 50 percent of publicly held shares.

BHP also proposes a share buyback of up to $30 billion within one year of the acquisition.

BHP said the offer represents a 45 percent premium on the Rio Tinto share price prior to the approach.

''A combined company would...create the world's premier diversified resources company with both sets of shareholders being offered an opportunity to be part of a truly great global growth story,'' BHP CEO Marius Kloppers said in a statement.

Rio Tinto has so far refused to enter into talks with its rival on the bid, prompting BHP to make the direct appeal to Rio Tinto shareholders.

In response to BHP's formal offer, Rio Tinto Chairman Paul Skinner said, ''The Boards of Rio Tinto will consider the terms of the proposal carefully in the light of all circumstances and will make a further statement once they have completed this assessment. In the meantime, the boards encourage shareholders not to take any action.''

The BHP bid follows the purchase of a 12 percent stake in Rio Tinto's British shares last week by China's state-owned aluminum giant Chinalco and U.S. partner Alcoa Inc.

The move by Chinalco and Alcoa has been interpreted by market analysts as an attempt to block BHP's takeover bid.