Why Rio Tinto turned down Chinalco
Metals company Chinalco would have gotten a whopping 9 percent of $19.5 billion and two board seats in mining giant Rio Tinto. Scott Tong reports why Rio is not as desperate any more to make a deal.
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Bill Radke: We all know China is making some big acquisitions these days, but the most ambitious deal has just fallen apart. We're talking about a $20 billion check to a mining company that os now getting ripped up. From Shanghai, Marketplace's Scott Tong reports.
Scott Tong: Metals company Chinalco was to put $19.5 billion in mining giant Rio Tinto, which is listed in Australia and the U.K. Chinalco would have gotten a whopping 9 percent of the company and two board seats.
Commodities consultant Michael Komesaroff:
Michael Komesaroff: They bit off more of the company than public opinion, including the shareholders, could digest.
Rio walked away today, after complaints from shareholders it was giving away the store. And given commodity and stock prices are up, Rio is not as desperate any more to make a deal.
There was political opposition, too. An Australian TV ad connected Chinalco to the Tiananmen killings 20 years ago.
Su Aik Lim: It is definitely a setback to Chinalco.
Su Aik Lim is with Fitch Ratings:
Lim: But this is not going to stop Chinese companies from continuing to seek out resources.
Industrial China has big needs for raw materials like minerals, wood, and oil and gas.
Rio Tinto is moving on, too: it still needs $20 billion so it's issuing new stock.
In Shanghai, I'm Scott Tong for Marketplace.
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