Did the Economy Kill BHP Billiton's Pursuit of Rio Tinto?

BHP Billiton Ltd (BHP) has abandoned its year-long pursuit of Rio Tinto Group (RTP); giving the current economic climate as a reason for the derailing of the hostile offer.

Rio plunged as much as 40% in London trading, while Australia-based BHP shares jumped 21%, according to Bloomberg.

As you can see from this graph of the percentage of BHP's shares outstanding on loan (%SOOL) over the past six months, short positions have decreased from 6% in May to 2.9% now. RIO's %SOOL has increased from 1.8% on October 21st to 2.6% now.

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BHP

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RIO (London listing)

There has been a large amount of volume traded in Rio, around 15m shares were traded on November 5 compared with the six-month average of 7M. In BHP's case, around 30M shares were traded at the end of last week compared to an average of 15M.

Disclosure: None