ClickAJob News

Mining giant BHP Billiton has raised their offer for rival Rio Tinto with the hope of creating the world's "premier" natural resources company.

The bid of 3.4 BHP shares per Rio share, or about £75 billion, is a 13 per cent increase on the original offer.

If a deal were to be reached, it would be the world's second-biggest corporate takeover and create the world's third largest corporation after Exxon Mobil and General Electric.

"The logic of this transaction is well understood; a combination would provide opportunities to exploit quantified synergies and benefits worth US$3.7 billion per annum, which would otherwise be unavailable to both sets of shareholders," said BHP chief executive Marius Kloppers in a statement

Some analysts have speculated that the bid may encourage a counter offer from China's state-owned aluminum producer, Chinalco, which bought up nine per cent, or £7 billion, of Rio's shares last week.

The move made Chinalco the single largest holder of Rio shares, but stands to lose the position if BHP is able to strike a deal.

BHP said it would return up to $30 billion (£15 billion) to shareholders through buybacks if the offer was successful, and had secured financing to follow through with the deal.

After posting a 2.4 per cent fall in first-half profits today, the first in five years, shares in the Anglo-Australian miner fell 7.54 per cent during trading in Sydney today to close at A$36.66 (£16.73), and have fallen almost three per cent to £15.50 during morning trading in London.

Shares of Rio Tinto fell 1.68 per cent to close at 5,434p yesterday in London, and have continued to fall over another percentage point to 5,375p in morning trading today.