11 December
Melbourne,
Dow Jones

MELBOURNE -(Dow Jones)- Rio Tinto Ltd. (RTP) has moved Tuesday to force BHP Billiton Ltd. (BHP.AU) to either lodge a formal takeover offer or walk away under the U.K.'s "put up or shut up" rules.

The move is designed to break the impasse between the parties over BHP’s US$158 billion three-for-one, all-share takeover proposal, which Rio Tinto has rejected but BHP is continuing to promote.

Rio Tinto said Tuesday it is now seeking a ruling from the U.K. Takeover Panel Executive under the U.K. Takeover Code that would give BHP a date by which it must make a firm offer.

"Such a ruling, if made, would set a deadline by which BHP Billiton must, unless the Takeover Panel Executive consents otherwise, either announce a firm intention to make an offer for Rio Tinto…or announce that it does not intend to make an offer for Rio Tinto," Rio Tinto said in a statement.

The panel will now consult with BHP before making a decision on whether to impose a deadline, and while the outcome varies depending on the case, it is common for a deadline of six to eight weeks to be imposed.

BHP said it would be inappropriate to comment on the Takeover Panel application while the process is underway.

"We remain committed to what we believe is a logical and compelling proposal and we would like Rio Tinto to engage with us," a BHP spokeswoman said.

In its application to the panel, Rio Tinto is expected to have made the argument that ongoing uncertainty over a possible BHP bid would be a distraction from the major projects it has underway, which include the bedding down of the US$38.1 billion Alcan acquisition, the divestment of up to US$15 billion of assets and a major expansion of its iron ore operations in Western Australia.

Fat Prophets analyst Gavin Wendt said the application to the panel was a good tactical move by Rio Tinto designed to break the current impasse one way or the other.

"It should flush BHP out — if they are serious about this they are going to have to come up with a serious offer," he said.

Wendt said BHP will have to make an offer closer to four-for-one if it wants to convince Rio Tinto shareholders to support a deal.

Southern Cross equities director Charlie Aitken believes the application by Rio Tinto could be a signal that the takeover target may be willing to enter into talks with its predator for the first time since the proposal was made last month.

"The put up or shut up move appears to be the first clear sign that Rio is prepared to entertain a deal," he said. "I think it’s very positive for BHP shareholders as it potentially breaks the stalemate."

Rio Tinto share were trading down 0.7% at A$145.75 at 0329 GMT while BHP was up 1.2% at A$44.12 in an Australian market up 0.7%.