Billiton and BHP in £20 billion merger

Billiton of the UK and BHP of Australia are to merge in a deal that will create a mining and metals company worth £20 billion.

Billiton of the UK and BHP of Australia are to merge in a deal that will create a mining and metals company worth £20billion.

The directors of BHP, a global natural resources company and Billiton, a leading mining and metals company have agreed a merger to establish BHP Billiton, a diversified global resources group.

According to a statement, a unified board and management team will run BHP Billiton, with headquarters in Melbourne, Australia, and with a corporate management centre in London.

Based on the closing prices of BHP and Billiton shares on March 16, 2001, the aggregate market capitalisation of BHP Billiton was approximately £20 billion; and its enterprise value was approximately £25 billion.

No shareholder in either company will need to exchange or tender their shares as, under the terms of the merger, one existing Billiton share will have an economic interest equivalent to 0.4842 existing BHP shares.

In order to ensure that the economic interest of each BHP and Billiton share is equivalent following implementation of the DLC, there will be a BHP bonus issue to its shareholders at a ratio of 1.0651 additional BHP shares for each BHP share held.

The merger will not affect the existing Billiton share capital of 2,319 million. Based on the terms of the merger the aggregate number of shares in issue in both companies following the merger would be approximately 6,024 million. Each of these shares would have equivalent economic and voting rights in the combined group.

The merger is conditional upon the approval of both BHP and Billiton shareholders and certain regulatory approvals.

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