Rio Tinto Makes Sale to Justify Buyout Demands

(NewsVisual, powered by IntellectSpace )-- In what may be an attempt to get BHP Billiton (NYSE: BHP) to boost its takeover offer, Rio Tinto (NYSE: RTP) has moved to sell its stake in a US gold mine for $1.7 billion.

The sale was made to Barrick Gold Corp (NYSE: ABX), which paid more than double for the stake than analysts had expected.

Rio Tinto has denied each of BHP's two buyout offers, claiming that the proposed price greatly undervalued the mining company. This latest news may only serve to justify Rio's claims. 

NewsVisual created an IntellectSpace Knowledge Map illustrating the ties between certain key executives at Rio Tinto and BHP though shared entities, though given Rio's strict position so far on a deal, BHP may have to rely on more than a common network to woo its target.

An initial mapping of the ties between the companies revealed numerous past and current relationships through various entities and industries. NewsVisual decided to include only those connections that included a current Director or Senior Executive at either company in order to highlight the strongest relationships between BHP and Rio Tinto.

Two of BHP’s current Directors, David Crawford and John Buchanan, are shown to be linked to various key individuals who were previously associated with Rio Tinto as Directors and Senior Executives. Crawford, a Director at Westpac Banking Corporation, is likely well acquainted with Westpac’s former Chairman, Leon A Davis, who was previously the Deputy Chairman of Rio Tinto. Also, Buchanan and former Rio Tinto Chairman/CEO Robert Wilson were previously Directors at Boots Co.

Other notable ties through common entities are illustrated through leadership and memberships with non-corporate entities related to the mining industry. It is likely BHP has pursued key contacts through these relationships in order to gain insight into forming the best strategies for making the merger a success.

In many cases, strong ties such as these between executive teams could go far in affecting deal negotiations. Though BHP may have exercised any means necessary short of giving into to Rio's ultimate monetary demands to secure a deal, it appears that power behind common corporate connections wasn't enough get its way.

Click here or copy this link into your Internet Explorer browser for an interactive version of this IntellectSpace Knowledge Map: http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=0ffc4bb4-c8f1-4e26-9789-06ed75696a5f

See article by Andrew Edwards in The Wall Street Journal (subscription required)