SYDNEY, Australia — BHP Billiton Ltd. on Wednesday launched a formal bid for rival mining company Rio Tinto Ltd. valued at $147.4 billion — the largest ever mining takeover offer.
BHP, the world's largest mining company, said it is offering 3.4 BHP shares for every Rio Tinto share, an increase from its initial and informal proposal of a three-for-one, all-share takeover, the Melbourne-based BHP said in a statement.
Rio Tinto, which owns Kennecott Utah Copper, has so far refused to enter into talks with its rival on a bid, which it said significantly undervalued the company.
Rio Tinto's chairman Paul Skinner said the company would carefully consider BHP Billiton's offer and asked shareholders not to take any action yet.
"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," Skinner said.
BHP, which made an initial approach in November, had until Tuesday to formalize its offer or walk away for six months after a U.K. Takeover Panel ruling.
The offer applies to both companies in the Rio Tinto Group: the Australian-listed company Rio Tinto Ltd. and British-listed Rio Tinto PLC.
The bid was subject to regulatory approvals in Australia, the U.S., Europe and elsewhere, and to 50 percent shareholder approval, BHP Billiton chief executive officer Marius Kloppers said at a news conference in Sydney.
He said the proposed merger would deliver efficiency benefits worth $3.7 billion a year and raise the value of shareholdings in both companies.
"There is widespread support for compelling logic of the proposal to combine companies," Kloppers said.
BHP Billiton's approach to Rio Tinto was complicated last week when Aluminum Corp. of China and Alcoa Inc. bought a 12 percent stake in Rio Tinto's London-listed stock, which equated to a 9 percent stake in the whole group.
Kloppers said the development was interesting but did not affect BHP Billiton's offer.
BHP Billiton said it had already secured a committed bank financing facility of $55 billion.
Under the offer, Rio Tinto would hold 44 percent of the combined entity. BHP Billiton's previous approach on Nov. 8 equated to 36 percent of the merged group.
If the offer is successful, BHP Billiton said it will return up to $30 billion to shareholders through a share buyback within 12 months of completing the acquisition.
Earlier Wednesday, BHP posted a net profit of $6.02 billion in the six months ended Dec. 31, down 2.4 percent from a year earlier because of moderating global growth.
The company's profit for the last half of 2006 was $6.2 billion.
BHP Billiton is already the world's largest diversified mining company, and Rio Tinto is the third-largest.
Steelmakers in China, Japan and Europe have protested BHP Billiton's bid for Rio Tinto, contending that a takeover would give it too much influence over global iron ore supplies and pricing.
The Rio Tinto purchase by Aluminum Corp. of China — a Chinese government-owned company also known as Chinalco — and Pittsburgh, Pa.-based Alcoa followed rumors that some Chinese entity might try to block BHP Billiton's takeover bid for Rio Tinto.
Chinalco President Xiao Yaqing said this week in Australia that the stake that Chinalco took in Rio Tinto reflected his company's confidence in the global economic outlook and the ability of Rio Tinto's management.
He suggested Chinalco might be prepared to sell its stake in Rio Tinto as part of a BHP bid "if the return is attractive."
Chinalco and Alcoa have said they have no intention to raise their stake in Rio Tinto, although they reserved the right to participate in a takeover offer within the next six months.
Contributing: Dow Jones and Bloomberg News