BHP Billiton Ends Bid for Rio Tinto

BHP Billiton, the world’s largest mining company, abandoned its hostile bid to acquire Rio Tinto on Tuesday, saying turmoil in financial markets, uncertainty about the global economic outlook and regulatory concerns in Europe meant the deal was no longer in the best interests of its shareholders.

BHP’s decision, which took most observers by surprise, is one of the sharpest examples to date of the way in which global financial and economic turmoil is jeopardizing corporate expansion plans. BHP’s bid for its Anglo-Australian mining rival was started a year ago and initially valued the smaller rival at $147 billion, which would have made it one of the biggest mergers ever. The size of the offer reflected the financial, economic and commodities boom that came to an end last year.

BHP, based in Melbourne, Australia, said in a statement on Tuesday that “recent global events and associated falls in commodity prices” had “increased the risks to shareholder value to an unacceptable level.”

The decision comes after months of steep declines in global stock markets. The price of many raw materials also has fallen amid expectations that slowing global economic growth will reduce demand for oil and metals. BHP said copper prices had fallen 43 percent in the 12 months to October and another 23 percent in November.

From New York Times