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M&A in the metals, mining sectors

Heard the rumors about BHP Billiton's planned takeover bid for rival miner Rio Tinto? Reuters reports that a bid is forthcoming, or at least is expected by market participants.

Here's more from Reuters:

Shares in Rio Tinto (RIO.L:
Quote, Profile, Research (RIO.AX: Quote, Profile, Research rose as much as 21 percent on talk that bigger rival BHP Billiton (BHP.AX: Quote, Profile, Research (BLT.L: Quote, Profile, Research was planning a bid to create the world's fifth biggest firm, but Rio denied it had been approached.

"Markets are betting that an offer is due soon," one London trader said
.

Talk swept Australian markets that BHP was readying a hostile bid for Rio after it had rebuffed a friendly offer of A$100-A$110 per share, a premium of up to 23 percent to Tuesday's closing price, traders and analysts said on Wednesday.

But Rio later issued a statement denying there had been an offer. "Rio Tinto is not aware of any takeover approach from BHP Billiton," it said in a statement. BHP declined to comment.

The rumored merger would create the world's fifth largest company by market value and a powerhouse in the diversified mining sector. For more on this, see Reuters' rundown of BHP Billiton and Rio Tinto metal production figures.

Word of BHP's planned takeover bid for Rio Tinto comes hot on the heels of another recently proposed deal in the metals sector; Tuesday saw Alcoa launching a
hostile bid for rival Alcan, following failed merger talks between the aluminum producers.

Update: "BHP, Rio rumours run out of oxygen". No public motion was put forward by BHP today in their widely-rumored quest to acquire rival Rio Tinto.

Shares of Rio Tinto fell on Thursday, as traders who bid up the shares on Wednesday were disappointed when a takeover bid failed to materialize. Analysts and fund managers quoted in the article above still feel the deal would make sense.

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