BHP Billiton and Rio Tinto
BHP Billiton is proposing to buy Rio Tinto for US£120bn. They are the two largest mining and commodities companies in the world, with turnovers for 2007 of US$32.2bn and US$25.4bn respectively. Combined, that is US$57.6bn, which would, if it were a state, put it 59th out of 180 countries, between Vietnam and Slovakia, by GDP on the IMF’s 2006 list1.
Between them, BHP Billiton and Rio Tinto could have an almighty influence on the world’s economy. As we know, China and India are consuming more and more steel, copper, coal , uranium and other things that are dug up from the ground, driving an increase in global demands.
It would be the second biggest merger in history, the largest being the takeover of Mannesman by Vodafone, but I think that raw materials are of greater importance per se and that there are fewer competitors in the market, meaning that you’d hope this would come up in front of a competition authority. In the case of Vodafone and Mannesman, it was the European Commission. I don’t think there is a competent body, either in terms of legal mandate or bureaucratic ability – to handle a merger like this.
xD.
1 – And, if done by PPP on the CIA World Fact Book’s figures, it would be 21st, behind South Africa and ahead of Poland.
November 27th, 2007 at 8:53 am
The merger would make the world’s largest copper, iron ore and thermal coal producer as well as being a very significant force in aluminium. The deal is subject to anti-trust and they may have to sell iron ore projects outside Australia.
November 27th, 2007 at 10:47 am
That’s one possibility; however, without wanting to cast aspersions on BHP or RT, they’re both dual-listed companies. My concern is not so much Australia, but some of the less-developed countries where force that might perhaps be considered undue could be brought to bear and the lack of a global authority to oversee it.
xD.