Blackstone plans Rio takeover and break-up

Reports in the UK press are claiming that Blackstone, the US private equity group, has plans to acquire and then break-up Rio Tinto.

Blackstone is apparently in the process of bringing together a consortium of bidders that will include China Investment Corp.

The latter is the Chinese sovereign wealth fund that invested $3 billion in Blackstone Group earlier this year.

Rio Tinto has recently turned down bid approaches from BHP Billiton, its chief executive arguing that the offer seriously undervalued the company.

BHP’s suggested three-for-one share offer resulted in Rio Tinto drawing up a list of possible disposals of non-core businesses, worth up to $30 billion, and it is rumoured that should Blackstone succeed in acquiring the group, it would break it up completely.

In this event, Rio’s recent merger with aluminium producer Alcan could be reversed and the group’s iron ore business, which is seen as its main asset, could be sold.

The iron ore operations alone are valued at least $110 billion.

Meanwhile, Rio Tinto is reported to be writing to the Takeover Panel to request a formal deadline for BHP to extend its acquisition offer.