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BHP clears U.S. hurdle in bid for Rio Tinto

July 03, 2008

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London—BHP Billiton announced on Thursday that The U.S. Department of Justice and the Federal Trade Commission (FTC) have essentially cleared the way for its proposed acquisition of Rio Tinto, a deal that would create the world's largest mining conglomerate.

The acquisition still needs regulatory approval from the European Union (E.U.), Australia, South Africa and Canada, according to media reports.

The Justice Department's antitrust division concluded its review of the proposal without further action, while the FTC granted early termination of the Hart-Scott-Rodino (HSR) waiting period, which was established by the U.S. government to help avoid some of the difficulties and expense that the enforcement agencies encounter when they challenge anticompetitive acquisitions after they have occurred.

"We are very pleased that we have received notice of early termination of the Hart-Scott-Rodino Act waiting period and completion of the Department of Justice merger review," BHP Billiton's Chief Commercial Officer Alberto Calderon said in a statement issued on Thursday.

The E.U. is due to announce its decision on the proposed takeover on Friday and is expected to investigate the proposed merger more fully with a final decision not anticipated until the end of 2008 or early 2009.

Iron ore is expected to be the main focus for regulators reviewing the proposed merger. Steelmakers, the biggest users of the raw material, have expressed concerns since both companies have big positions in iron ore in Australia and a takeover of Rio by BHP would give it a market share of some 40 percent, leaving almost 75 percent of the world's seaborne iron ore trade in the hands of just two companies: BHP-Rio and Vale of Brazil, the only other key competitor.

Japanese and Chinese customers of the two Australian miners have been particularly opposed to the merger, according to The Times of London.
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Business | Company Activities and Information | Consumer Protection | Mergers and Acquisitions

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