De Beers' bid for Ashton a dilemma for Rio Tinto

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The Independent Online

Rio Tinto, the Anglo-Australian mining company, yesterday said it was considering its response to the A$522m (£204m) hostile bid by De Beers, the diamond giant, for Ashton Mining.

Rio Tinto, the Anglo-Australian mining company, yesterday said it was considering its response to the A$522m (£204m) hostile bid by De Beers, the diamond giant, for Ashton Mining.

Taking over Ashton would give De Beers 40 per cent of the Argyle plant in Western Australia - the world's biggest diamond mine - which is 60 per cent controlled by Rio Tinto.

A Rio spokeswoman said her company had not been consulted ahead of De Beers' announcement. Asked whether Rio would consider mounting a counter-offer for Ashton, she said: "It's early days. We've only been aware of the offer since start of business [yesterday] morning."

Roger Chaplin, an analyst at Canaccord Capital, said: "I think [Rio] has got a bit of hard thinking to do. Do they think the Argyle mine is worth more than the $1.62 a share De Beers is offering? Are they prepared to work with De Beers as a partner? And if not, would De Beers be prepared to buy the rest of Argyle at a similar level?"

Rio is already embroiled in a takeover battle with Anglo American over Australia's North. It is considering whether to raise its initial A$2.8bn hostile offer to trump Anglo's A$3.1bn rival bid.

Doug Bailey, Ashton's chief executive, described the De Beers offer as "opportunistic" and urged shareholders not to sell. However, Malaysia Mining Corp, which owns 49.9 per cent of Ashton, has already tendered a 19.9 per cent stake.

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