BHP Billiton Ltd
(ASX:BHP) and Rio Tinto Ltd
(ASX:RIO) have jointly decided to walk away from their planned $116 billion joint venture to tie-up iron ore production in the Pilbara region of Western Australia.
Receiving clearance from competition regulators was always going to be an obstacle for the global miners and following extensive discussions Rio and BHP have been told the proposal would not be approved in its current form.
CEO Marius Kloppers says the large synergies from combining BHP’s iron ore assets with Rio’s have spurred the miner to persevere with regulatory approval.
However as it became clear the deal would not receive the go-ahead both miners have reluctantly agreed to abandon the merger.
Among the regulators that indicated they would block the merger are: The European Commission, Australian Competition and Consumer Commission, Japan Fair Trade Commission, Korea Fair Trade Commission, and the German Federal Cartel Office.
Having decided to terminate the agreement BHP also advises both miners have agreed that they will not need to pay a break fee, that could have been up to $250 million.
BHP says while pursuing approvals for the joint venture it continued to invest in its West Australian iron ore business, and will continue to grow and operate the operations through the existing Perth-based iron ore management team.
BHP Billiton posted a profit of $15.26 billion in fiscal 2010.
