SYDNEY (Thomson Financial) - The boards of dual-listed Anglo-Australian mining group Rio Tinto have written to shareholders advising them to reject BHP Billiton's latest takeover offer, the world's third largest miner said Monday.
The letter, to be sent out today, argues that BHP's offer 'significantly undervalues' Rio Tinto.
'Rio Tinto's boards have given careful consideration to BHP Billiton's pre-conditional offers and have concluded that they still significantly undervalue Rio Tinto,' the letter says.
'Accordingly, the boards have unanimously rejected BHP Billiton's pre-conditional offers as not in the best interests of shareholders.'
Last week BHP, the world's largest diversified resources group, improved its offer to 3.4 of its shares for each Rio Tinto share and made it conditional on a 50.1 percent acceptance.
The formal offer values Rio Tinto at about 147 US billion dollars and follows a 3-for-1 proposal made last November, which Rio Tinto's chief executive Tom Albanese was 'several ballparks away' from representing fair value.
The Rio Tinto directors said they believe the group is on the verge of an 'exceptional' period of growth and that the BHP offer doesn't recognise its true value.
'Your boards believe that Rio Tinto is poised for exceptional growth and we have a clear, proven strategy for delivering value to you, our shareholders,' the letter said.
'BHP Billiton's offers, while improved, still fails to recognise the underlying value of Rio Tinto's high quality assets and prospects.'
The letter said the group's plans are unchanged and will remain so unless a proposal is made that fully reflects the value of Rio Tinto.
'We are forging ahead with our strategy of operating and developing large-scale, long life, low cost assets to generate significant value for shareholders,' it said.
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