BHP Billiton will have to add $15bn (£7.3bn) in cash to its takeover offer for Rio Tinto in order to get shareholder approval, said a leading investor in both companies.
Jane Coffey, head of equities at Royal London Asset Management, said that BHP will need inject an additional "cash sweetener" equal to 10 per cent of the $153bn all-share offer that it tabled earlier this month. "They will need to add a cash element to get it done," Ms Coffey said.
She expressed confidence that the requirement is not insurmountable and that a deal will get done. "This will happen one way or another, though it will be a long process," she said. "BHP will offer more." Royal London holds £265m in Rio shares and £165m worth of BHP stock.
After meeting with investors in London and South Africa to explain their plan to force the world's first mining "super-major" this week, BHP chief executive Marius Kloppers will fly to Asia next week to meet institutional investors with holdings in both BHP and Rio. Chief finance officer Alex Vaneslow will do the same in America.
Their efforts come amid speculation that Rio could launch a counter bid for BHP, though sources close to the situation strongly denied such a so-called "Pac-man" defence was part of its strategy. Thus far, Rio has declined to engage with its larger rival. Chief executive Tom Albanese is expected to lay out his arguments against the tie-up at a 26 November shareholder meeting.Reuse content