The Day After for Rio Tinto

November 26, 2008

A day after mining giant BHP Billiton dropped its bid for rival Rio Tinto, Rio said it was confident it could sell assets worth billions of dollars. Analysts aren’t convinced.

As the credit crisis dries up available funds, some companies are backing away from buying anything.

“The environment over the next six to 12 months is not going to be a good environment for selling assets,” said FW Holst analyst Rob Craigie.

Despite the skeptics, Rio Chairman Paul Skinner, speaking at a scheduled business breakfast, said it would make asset sales in the next few months.

“We now move on. We have a very strong company,” Skinner told reporters. “We are confident with our financial position. We have other ways of managing our debt.”

Assets on the block include a major packaging business, aluminum products, its U.S. coal business, an Australian copper mine and its U.S. Sweetwater uranium mine.

(Note from Editor: Given the Thanksgiving Day holiday this week, today’s posting will be the last for this week. Expect us back as usual on Monday.)

More Deals of the Day:

** Goldman Sachs has broken off talks with Panasonic Corp for now on selling its stake in Sanyo Electric after the electronics maker made an offer below Sanyo’s current stock price.

** India’s Sun Pharmaceutical Industries Ltd said its unit had acquired 100 percent of U.S.-based narcotic producer and importer Chattem Chemicals Inc for an undisclosed sum.

** QBE Insurance Group Ltd, Australia’s top insurer by premium income, will buy U.S.-based underwriting agency ZC Sterling Corp for $575 million, part funded by a $1.3 billion equity raising, and has upped its 2008 revenue growth target.

** Bahrain-based retail lender Bank of Bahrain and Kuwait is considering merging its newly-launched Islamic bank with peer Shamil Bank or another bank, its chief executive said in remarks published in Al Watan newspaper.

** U.S. private equity group KKR is planning a bid for Abengoa’s Nasdaq-listed technology unit Telvent GIT, Expansion reported citing sources familiar with the deal.

** Trading in shares of Woolworths Group Plc, the struggling sweets-to-DVDs retailer, were suspended, while talks continued to save the business from collapse. The 99-year-old group confirmed it remains in talks regarding the potential sale of its 800-store retail business to restructuring specialist Hilco UK for a nominal sum.

** Mobile telecoms equipment provider Ericsson and chipmaker STMicroelectronics won permission from EU competition authorities to combine their wireless chip and software businesses.

** Hungary’s OTP has been looking at possible foreign acquisitions in recent months but is not likely to make any purchases until the global financial crisis is over, Chief Financial Officer Laszlo Urban said.

** Spain will fight to keep oil major Repsol YPF Spanish and independent in the face of possible stakebuilding from Russia’s LUKOIL, Prime Minister Jose Luis Rodriguez Zapatero said.

** Colonial has granted buy options on its 15.45 percent stake in Spanish builder FCC and its 33 percent of French unit SFL to its creditor banks, the property developer said.

** Porsche SE will not pay “ridiculous” prices for VW shares amid recessionary conditions, it said, backing away from its previous target to take majority control of Europe’s biggest carmaker by the end of the year.

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