Blackstone Readying Counterbid for Rio Tinto - Telegraph

Private equity firm Blackstone Group (BX) is assembling a consortium for the purpose of submitting a counterbid for Australian miner Rio Tinto (RTP), currently the target of a hostile offer by BHP Billiton (BHP), the British paper the Telegraph reported Monday. The consortium is said to include China Investment Corp., China's $200 billion sovereign wealth fund. Rio is planning to defend itself from Billiton's three-for-one offer by selling up to $30 billion in assets, possibly including the talc business, two uranium projects, the Northparkes copper and gold mine in Australia and the US Greens Creek zinc, lead and silver mine. Blackstone wants to buy the company and break it up completely. The Telegraph maintains that Blackstone's primary target is Rio's iron ore operations, which Blackstone values at a minimum $110 billion based on existing reserves -- though further mineralization in the Pilbara in Australia and at the Simandou project in Guinea could push that figure considerably higher. The Chinese steel industry is a massive consumer of iron ore and has expressed concern that a Rio-Billiton combination could control the market. Blackstone has close ties to China, feeding speculation that China is involved in the pending bid: China Investment Corp. bought a 10% stake in Blackstone for $3 billion just prior to its IPO.

Sources: The Telegraph, Reuters
Additional Reading: A Chinese Bid for Rio Tinto?

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