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BHP Billiton backs off bid for Rio Tinto

November 25, 2008

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London--The board of mining company BHP Billiton announced today that it is not moving forward with its acquisition of rival mining company Rio Tinto, according to a release on the company's Web site.

The company decided that the "completion of offers" for Rio Tinto is no longer in the best interest of its shareholders, the release states.

"We have said that we would only seek to complete the transaction if it was in the best interests of BHP Billiton's shareholders," Chairman Don Argus said. "While we have not changed our view of the basic industrial logic of the combination, or of the long-term prospects for natural resource demand growth driven by emerging economies, we have concerns about the continued deterioration of the near-term global economic conditions, the lack of any certainty as to the time it will take for conditions to improve and the risk that these issues imply for shareholder value."

BHP Billiton began bidding for Rio Tinto in November 2007, but was rebuffed by the Australian mining company along the way. BHP Billiton subsequently received clearance from both the U.S. Department of Justice and the Australian Competition and Consumer Commission for the deal.

However, the European Commission had required Rio Tinto to make divestments in iron ore and metallurgical coal to deal with anti-trust issues, divestments the company is not wiling to make in challenging economic times.

"In the normal range of economic conditions, BHP Billiton would have been prepared to offer remedies which we believe would have been both acceptable and manageable," the release states. "However, given the current economic circumstances and uncertainty regarding our ability to achieve fair divestment values in the required time frames, these remedies would contribute to the cost and risk of the transaction...BHP Billiton will not offer any remedies to the European Commission antitrust authorities, and BHP Billiton expects that without remedies, European Commission clearance will be withheld."
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