Rio Tinto shareholders may refuse venture with BHP
Rio Tinto shareholders are still likely to refuse the $US116 billion iron-ore joint venture with BHP in the Pilbara, according to Royal Bank of Scotland analysts.
The Australian Competition & Consumer Commission last week finally announced it would have a decision on July 22, after a recurrent delay.
However, even if approved by the competition guard, RBS analyst Lyndon Fagan said Rio's investors were likely to vote against the deal, which requires Rio Tinto to sell a 5 per cent stake in its bigger operations to BHP Billiton to form a 50-50 joint venture.
"We continue to believe that Rio shareholders will not vote for the JV under the current payment terms," said Fagan.
The venture includes the pair's iron ore mines, ports and railways in Western Australia's Pilbara region. It is predicted to provide more than $US10bn ($11.5bn) in synergies.
The ACCC last month requested more information from Rio and BHP but analysts do not expect the watchdog to block the deal.
Last week, Rio and BHP also consented to shell out an additional $1.4bn in WA state royalties and other payments in the next four years to share their port and rail systems. The deal means WA government endorsement for the merger is probable.