Blackstone Considering Bid For Rio

US-based private equity group Blackstone has today been linked with a move for mining giant Rio Tinto in direct competition to that of BHP Billion, which has had its recent takeover move rejected for undervaluing the assets of the company at over £63 billion.

The announcement today comes from a report leaked to the Daily Telegraph, suggesting that Blackstone is currently in the process of forming a consortium of interested parties before preparing to launch a bid for the leading mining group, which is listed in both London and Sydney.

Amongst the rumoured consortium members are some kind of Chinese authority backed fund along with Blackstone and its other partners, and it is expected that any bid launched would be on the condition that the business could be broken up, resulting in a demerger with recent acquisition Alcan, which could initially cost the company a great deal of time and money, and may not on the face of it be overly appealing to shareholders.

Rio Tinto has been adverse to the concept of a takeover by BHP for some time, and has taken a number of measures to block their approaches for the business, such as selling off certain assets to boost immediate share values. Market analysts have today said that as a result of moves to block BHP, Rio has underlined its commitment to driving growth in its core sectors in line with Eastern demand.

It remains to be seen whether the advent of some Chinese interest may be more appealing to the shareholders of Rio Tinto, in light of their forecast growth areas over the coming decades.

Meanwhile Blackstone already holds a number of ties with China, particularly since China Investment Corp became a 10% shareholder at a price of $3 billion earlier in the year, making it likely that it will look to strengthen its holdings in linked industries.

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