A Chinese Bid for Rio Tinto?

It makes sense all the sense in the world that China, broadly defined, should

make a bid for Rio Tinto. If it doesn’t, there’s a very good chance that the

BHP-Rio merger will go through – a merger which would be unambiguously

bad for Chinese iron-ore importers. Given that China’s sovereign-wealth fund

seems unlikely to make a bid, a strategic bid from China’s private sector has

to be a strong possibility.


Helen Yuan says that a number of Chinese steelmakers are interested, although

one in particular, Shougang, has repudiated

the story. And a Reuters

report saying that Baosteel might pay as much as $200 billion for Rio Tinto

has been "taken with a grain of rice," according to the WSJ’s Chris


I can’t remember any Chinese company getting into a bidding war in the international

M&A arena, but it’s inevitable that sooner or later that will happen. And

Rio Tinto is a big enough prize that it might just be the company to make such

an aggressive bid worthwhile.

One big unknown: How the new left-leaning Australian government would react

to such a bid. The new prime minister, Kevin Rudd, is famously fluent in Mandarin.

But that doesn’t make him more or less likely to object to a Chinese takeover

of a large swathe of Australia’s natural resources.

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