As they say, it's all over but the shouting. A deal between Aluminum Corp. of China
In its place, Rio Tinto will conduct a rights offering among its shareholders and form an iron ore joint venture with Australian rival BHP Billiton
The loans relate to the little more than $38 billion taken down when Rio handily topped Alcoa
The Rio Tinto-Chinalco deal would have raised about $19.5 billion for Rio and doubled Chinalco's stake in the miner. Early last year, with BHP looking to acquire Rio, Chinalco and Alcoa teamed up to help thwart that acquisition by acquiring a 9% interest in Rio Tinto. The latest deal would have had Chinalco investing $7.2 billion in Rio in exchange for convertible bonds, along with putting another $12.3 billion into positions in Rio Tinto mining assets.
Instead, Rio Tinto will receive about $15.2 from its rights offering, along with another $5.8 billion from BHP Billiton related to the formation of the iron ore joint venture. Probably as a salve to the regulators, while the companies will operate their iron ore operations as one unit, their marketing efforts will remain separate. Along with Brazil's Vale
If I had to pick a winner in this chain of events, it would likely be BHP. It will gain access to Rio Tinto's iron ore, which was its main interest in acquiring Rio in the first place. And the two companies believe they can extract as much as $10 billion in savings from their combined operation.
Given all that, were I a Fool with an appetite for minerals and metals -- which, in reality, I am -- I wouldn't let BHP out of my sight.
To mine some related Foolishness:
Fool contributor David Lee Smith doesn't have financial interests in any of the companies mentioned above. But that doesn't mean he doesn't welcome your questions or comments. The Fool has a steel-strong disclosure policy.