Newspaper article The Evening Standard (London, England)

Rio Tinto Leaps on Buzz over [Pounds Sterling]50bn Raid by BHP

Newspaper article The Evening Standard (London, England)

Rio Tinto Leaps on Buzz over [Pounds Sterling]50bn Raid by BHP

Article excerpt

INVESTORS were digging deep for mining giant Rio Tinto as talk of a hostile [pounds sterling]50 billion bid from rival BHP flared up again.

The shares soared by 137p to 3676p, nearly 4%, with investors further excited by speculation that Warren Buffett had bagged 35 million shares in the group via Citibank.

Two large parcels of shares, one for 14.5 million and one for 21 million at 3662p were sold just before midday and Buffett recently told investors in Berkshire Hathaway he wanted to buy "something huge".

Just two days ago Rio was forced to issue a statement denying knowledge of an approach from BHP following a 6% rise in shares on the Australian stock exchange, where Rio also has a listing.

With no statement from Rio today, the word is that any move is likely to be highly aggressive and would have to offer a considerable premium to the current price. Morgan Stanley recently priced Rio at 3880p on fundamentals alone and a realistic bid would have to offer shareholders at least [pounds sterling]40 a share.

Traders were unwilling to dismiss fresh rumours that private equity might be sniffing around.

"Nothing is too big for them these days," said one. Most of the other major miners benefited from the attention, notably Vedanta Resources, up 35p at 1407p and Lonmin, 90p ahead at 3892p.

Interest in Rio and a handful of other bid stories countered the deeply negative sentiment flowing out of Asia and America overnight and ensured the FTSE 100 was down a mere three points at 6521.1. Earlier in the day it had fallen back 72.2 points, mainly in response to steep falls on Wall Street.

Struggling telephone directories group Yell rang up a 12p rise to 5091/2p as investors warmed to rumours that Google is interested.

Talk of a [pounds sterling]21 bid for Standard Chartered saw the bank climb 73p to 1616p with talk of a buyer in the Middle East proving popular. However, a bout of share buying today by most of the directors underlines that rumours of an offer are, at present, just that. …

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