MELBOURNE, AUSTRALIA — BHP Billiton Ltd., the world’s biggest mining company, may need to offer cash for Rio Tinto Group after it rejected what may be the largest-ever takeover.
Rio rose to a record in trading in London and Sydney after BHP’s stock offer was blocked by Rio’s directors Wednesday. Rio has a market value of $159 billion, based on Wednesday’s closing.
“Cash is king, and it may be the sweetener that could force the hand of Rio’s directors,” said Ric Ronge, who helps manage $1.8 billion at Pengana Capital including Rio shares, in Melbourne.
Buying Rio would create a company that controls more than a third of the iron-ore market, supplies the most energy, coal and copper, and owns mines and oilfields on six continents.
The combination would be the biggest in a record year for mergers. A successful bid for Rio may eclipse America Online Inc.’s $124 billion purchase of Time Warner Inc.
Combining BHP and Rio, which just bought aluminum producer Alcan Inc., would create a company with an estimated net profit of as much as $26 billion.
