To think that Rio Tinto was once considered a dull company. In the past two years it has agreed the mining sector’s largest acquisition ($40 billion for Alcan), fought off a hostile takeover bid from BHP Billiton that would have created the world’s third-largest company and negotiated the largest corporate deal with China to date.
Unfortunately, all of these decisions turned out to be costly mistakes. In the case of Alcan and BHP, hindsight has demonstrated that Rio’s position was not in the best interests of shareholders, while the deal to raise $19.5 billion from Chinalco, the Chinese state-owned metals group, stank from day one.
Investors were furious that Rio’s Chinalco deal trampled on their capital-raising pre-emption rights and the Australian Government was also worried