This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Billiton to Buy Rio Algom for About $1.1 Billion

Updated from 12:17 p.m. EDT

Billiton, the mining and metals company, said Friday that it would acquire Rio Algom (ROM) of Canada for about $1.1 billion in cash, advancing into the global copper producing business while rolling over a rival bid made by Noranda.

U.K.-based Billiton said it would exchange roughly $18.12 for each Rio Algom share, which represents a 49% premium over the company's closing price of $12.19 on Monday, the day before the offer announcement from Noranda. Those figures are based on a currency exchange rate of 1.49 Canadian dollars for each U.S. dollar.

Noranda had said on Tuesday that it would pay about $16.55 a share, providing a 35% premium over Rio Algom's share price on the previous day. Noranda also said it had planned to sell a 50% stake of Rio Algom's assets to Codelco, a copper-producing company control by the government of Chile.

Although Toronto-based Rio Algom rebuffed Noranda's overtures, saying the Noranda bid was unsolicited, its shares soared 46% Tuesday. Rio Algom finished Friday regular trading up 1 11/16, or 10%, at 19 3/8.

Still, the deal must win approval from regulators as well as stockholders who hold two-thirds of Rio Algom shares. The Rio Algom board unanimously recommended the agreement with Billiton, the companies said.

Rio Algom produces copper from mines in Chile, Argentina and Canada and has a portfolio of mainly copper and zinc development and exploration assets in South America "Rio Algom will bring to Billiton a quality portfolio of low-cost, high-growth operating assets and development properties," Billiton said in a statement.

Billiton said the transaction could make a dent in profits this year, but added that after the start of Rio Algom's copper-zinc project in Peru, which is expected in the second half of 2001, earnings could get a boost.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
ROM $166.17 0.61%
AAPL $132.65 1.82%
FB $81.91 0.47%
GOOG $555.37 -1.71%
TSLA $231.55 6.01%


DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs