Scratch that about Baosteel’s interest in making a bid for Rio Tinto (ASX:RIO). Baosteel president Xu Lejiang did some serious back-tracking the media yesterday. He told the Shanghai Securities News that no, he’d never said Baosteel might be interested in making an offer. “I did not say this. It is a fabrication of the media.”
He said. She said. His word against the media’s. Who knows? One thing we do know is that the Daily Reckoning Australia now has over 20,000 readers. You’re one of them. Thanks for your time and loyalty. Next stop, 50,000!
Back to Rio. A more interesting question now is who else can manage to swing a deal for the company? Would it be a consortium like the one mentioned (or fabricated) in recent media reports? Baosteel’s publicly listed unit has market cap of around AU$43 billion. BHP Billiton’s (ASX:BHP) bid values (or undervalues) Rio at US$150 billion. Baosteel was, if reports are to be believed, thinking of a bid in the US$220 billion range.
Let’s see…where would you find an extra US$175 billion dollars these days? The China Investment Corporation (CIC), the official investment arm of the State, has about US$200 billion. But you wouldn’t want to put all your chickens in one coop would you? China would love to invest in strategic energy and resource assets, at the right price of course.
The Daily Reckoning Australia