By James Regan
SYDNEY (Reuters) - BHP Billiton , the world's biggest mining company, said it was considering its next move in its attempt to open takeover talks with smaller rival Rio Tinto , which has so far rebuffed its advances.
BHP Chief Executive Marius Kloppers said on Wednesday the company's proposal to offer three of its shares for every Rio Tinto Plc/Ltd share was compelling and would unlock billions of dollars in synergies.
BHP was considering its next step and was talking to shareholders about their views, Kloppers said in a media briefing.
Kloppers declined to give details about what might follow, but said: "We are supremely value focused, very disciplined and we will certainly stick to that."
When asked whether BHP was taking into account that market prices were factoring in an increased 3.4-for-1 share offer he said: "I can't contemplate going to my existing shareholders and telling them that they get nothing in addition, and it is on that basis that we would evaluate our actions going forward."
BHP was expected to boost its offer by about a fifth, possibly by adding a cash sweetener, a Reuters poll of investors and analysts showed last month.
UBS has said BHP could afford to put $27 billion in cash into the offer on top of a promised $30 billion share buyback.
BT Investment Management analyst Tim Barker said BHP's likeliest starting point would be a formal 3-for-1 share offer.
"They must be seriously thinking about bringing out the 3-for-1 if they're being forced," he said.
Rio on Tuesday said it asked Britain's Takeover Panel to set a deadline under a "put up or shut up" rule by which BHP would have to formalize its approach or walk away.
Kloppers said BHP had yet to make its own submission to the panel and would continue to press for discussions with Rio, but he saw no "sense of urgency" to get on with a formal bid.
"We don't believe it's in the interests of either set of shareholders, particularly for the Rio shareholders, to cut short the debate regarding this potential combination."
Rio has rejected BHP's proposal, which it received in the form of a letter, as "out of the ballpark" and "dead in the water," and has declined to meet BHP to discuss a merger.
A Rio Tinto spokeswoman said Rio saw nothing new in BHP's latest comments that would sway its position. "It was pretty much the same stuff we've heard." said Amanda Buckley.
When BHP made its approach in early November, it was worth $140 billion, but was valued at around $130 billion based on Thursday's share prices.
Rio shares in London slipped 1.9 percent to 5,572 pence while BHP shed 2.5 percent to 1,630 pence, compared to a 2.3 percent fall in the UK mining index as copper prices tumbled.
A combined BHP-Rio would hold about 27 percent of the world market for iron ore. It would also control large portions of the global flow of coal, copper, uranium and diamonds.
In its present form, a merger would be the second-biggest corporate takeover after Vodafone's $203 billion buyout of Mannesmann in 2000.
John Meyer, head of resources in London for investment bank Fairfax IS, said BHP appeared now to be using delaying tactics.
"There's a commercial advantage to BHP in creating all this uncertainty around Rio Tinto, it makes it difficult for Rio to go and do other things."
Kloppers said the company was proceeding with its expansion plans at its massive Olympic Dam copper, gold and uranium mine and was studying infrastructure improvements for its iron ore business. He also played up BHP's prospects for growth in nickel mining and in oil and gas.
Rio has received requests from others interested in a merger, but so far had not responded, according to Chief Executive Tom Albanese.
Swiss-based mining group Xstrata said on Wednesday it had held preliminary talks about possible mergers, but the discussions resulted in no proposals, without mentioning names.
Xstrata has been named in speculation as a possible counter suitor for Rio Tinto. Recent press reports, however suggest Xstrata may be a target itself in the sights of potential suitors such as Brazil's Vale and Anglo American.
(Additional reporting by Eric Onstad in Johannesburg; Editing by Ian Geoghegan and Elaine Hardcastle)