Bhp Group Ltd · ASX:BHP
Bhp — RIO Tinto — Merger or Acquisition (November 2008)
27 slides from Bhp's merger presentation, Nov 12, 2008
Slide 1: Filed by BHP Billiton Pursuant to Rule 425
Filed by: BHP Billiton Plc and BHP Billiton Limited Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Rio Tinto plc Commission File No.: 001-10533 The following are slides comprising a presentation that was given by Don Argus, Chairman, BHP Billiton on November 11, 2008.
Slide 2: Resourcing the Future
SHANGHAI Resourcing the Future 11 November 2008 Don Argus Chairman
Slide 3: Disclaimer
Disclaimer By reviewing/attending this presentation you agree to be bound by the following conditions. The directors of BHP Billiton Limited and BHP Billiton Plc (“BHP Billiton") accept responsibility for the information contained in this presentation. Having taken all reasonable care to ensure that
Slide 4: Disclaimer (continued)
Disclaimer (continued) No statement concerning expected cost savings, revenue benefits (and resulting incremental EBITDA) and EPS accretion in this presentation should be interpreted to mean that the future earnings per share of the enlarged BHP Billiton group for current and future financial years
Slide 5: Short-term global economic turmoil
Short-term global economic turmoil Gross domestic production (% growth, constant 2006 US$) Asian Banking Technology Current Financial 14 Crisis Correction Crisis 12 10 China 8 Emerging and 6 developing economies 4 2 Advanced economies 0 -2 Source: IMF World Economic Indicators, October / November 20
Slide 6: In the long-term China remains on the steep part of the development curve
In the long-term China remains on the steep part of the development curve supported by six growth drivers Housing Structural Reform High Value Manufacturing Rising Incomes Urbanisation Rural Development Slide 5
Slide 7: The significance of the resources sector to Australia
The significance of the resources sector to Australia GDP Exports (Percent of GDP) Percent (based on FOB value) Total = A$998bn Total = A$168bn 100% 100% 80% 80% 54% Other exports 60% All other 60% 83% sectors 40% 40% Mineral 46% commodities** 20% 20% Mining 17% sector* 0% 0% 2006-07 2007 * Direct a
Slide 8: Outstanding performance
Outstanding performance Neptune Gulf – of Mexico Slide 7
Slide 9: Our core strategy sets us apart in our industry
Our core strategy sets us apart in our industry • Focus on world-class assets that are large, low-cost and expandable Simplicity • Focus on the extraction of upstream natural resources • Portfolio diversified by commodity, customer and geography reducing the volatility of cash flows Accountability •
Slide 10: Despite our size, simplicity is a core element of this strategy
Despite our size, simplicity is a core element of this strategy EBIT per employee (US$’000) 700 600 500 400 300 200 Pre-Alcan 100 Post-Alcan 0 BHP Billiton Rio Tinto(a) Vale Xstrata Anglo American Note: EBIT and Employees as per last published Annual Report, data does not include contractors. BHP Bi
Slide 11: Outstanding results delivering superior returns to shareholders
Outstanding results delivering – superior returns to shareholders Ordinary dividends per share (US cents per share) 70 70 60 50 47 H2 40 36 30 28 26 20 13 15 H1 10 0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Note: Two interim dividends were paid in FY2004. Slide 10
Slide 12: Outstanding results driven by strategy and execution
Outstanding results driven – by strategy and execution (a) th Underlying EBITmargin • Achieved record profit for the consecutive 7 year (FY2008) • Attributable profit up 12%, EPS up 18% Group 48% • Dividend rebased upwards a signal of our outlook confidence Petroleum 67% Energy Coal 30% • Full year
Slide 13: The benefits of diversification across a high margin portfolio
The benefits of diversification across a high margin portfolio (a) Underlying EBITmargin (%) 80 70 BHP Billiton 60 Petroleum Aluminium 50 Base Metals D&SP 40 SSM Iron Ore Manganese 30 Met Coal Energy Coal 20 10 0 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2
Slide 14: Maintenance of a deep diversified inventory of growth options
Maintenance of a deep diversified inventory of growth options Maruwai NWS CMSA Heap Angola Macedon CMSA Heap CerrejonStage 2 T5 WA Iron Ore CW Africa DRC Olympic Dam & DRC Leach 1 Opt Exp Exploration Smelter Leach 2 RGP 4 Expansion 1 Angostura Atlantis RBM Mad Dog Newcastle Antamina Guinea Gas North
Slide 15: Focused on low risk volume growth from existing assets
Focused on low risk volume growth from existing assets and in our own backyard growth(a) Expectedproduction (Copper equivalent tonnes, CY2007-CY2012) Byprojecttype(b) Byregion(c) New Greenfield 3% 13% 87% 97% Brownfield Existing 63% Notes: a) Growth in production volumes on a copper equivalent units
Slide 16: The Rio Tinto Offer
The Rio Tinto Offer dl bhpbilliton Slide 15 urcing the future
Slide 17: Overview of the offer for Rio Tinto
Overview of the offer for Rio Tinto • Pre-conditional offer, capable of acceptance by shareholders following completion of regulatory processes and posting of offer documents • Regulatory processes anticipated to be completed by early 2009 • Rio Tintoshareholders arebeingoffered3.4BHPBillitonsharesf
Slide 18: 3.4 continues to be compelling value
3.4 continues to be compelling value Historical ratio(b) shareexchange 3.6 : 1 2. Initial period following announcement of proposal/offer BHP Billiton's offer for Rio Tinto 3.4 : 1 3.2 : 1 3.0 : 1 45% 3.Ongoing premium (a) 2.8 : 1 regulatory clearance 2.6 : 1 process 1. Prior to 2.4 : 1 BHP Billiton
Slide 19: Shareholder questions and a few answers
Shareholder questions and– a few answers • If satisfactory regulatory clearance is not achieved and/or the offer fails, what will happen to Rio Tinto’s relative share price? • What happens if regulatory clearance is achieved and Rio Tinto shareholders accept the offer? – Capture the 45% premium (a)
Slide 20: Comparative dividend per share
Comparative dividend per share FY2008dividends perA$1,000 ofshares(a) FY2007toFY2008DPSgrowth(b) A$24.95 BHP Billiton BHP Billiton 49% (2.50% yield) A$19.67 Rio Tinto Rio Tinto 31% (1.97% yield) FY2008 vsFY2002 DPS (b) Netdebt(c) BHP Billiton 5.4x BHP Billiton US$8.5bn Rio Tinto 2.2x Rio Tinto US$42
Slide 21: Combination is about reducing risk, not increasing it
Combination is about reducing risk, not increasing it • Increased sizedoesnotmeanincreased complexity – simplicity ofthebusiness modelremainskey • We believe operating as one company results in: – More diversified and higher quality asset portfolio, lower risk – An enhanced portfolio of growth oppor
Slide 22: Indicative timetable for the offer
Indicative timetable for the offer 2008 2009 Offer Period (a) Event Jul Aug Sep Oct Nov Dec Jan Day0 Day 60 Post Day 60 Regulatory Approvals Satisfaction of regulatory approval pre-conditions Offer Documentation (within 28 days of the Posting of offer documents for Rio Tinto plc offer pre conditions
Slide 23: Summary
Summary • We expect financial market volatility and economic uncertainty to continue in the short-term • However, China, India and other developing economies are expected to continue to drive demand for commodities in the long-term • Our uniquely diversified portfolio of low cost and high quality as
Slide 24: Questions and Answers
Questions and Answers Slide 23
Slide 25: BHP Billiton's senior management team
BHP Billitons’ senior management team Chairman and Chief Executive Officer Don Argus Marius Kloppers Chairman Chief Executive Officer • Chairman of BHP Billiton • 15 years resources Group since June 2001 experience • Chairman of BHP Limited • 15 years at BHP Billiton since April 1999 Group Managemen
Slide 26: More information for shareholders
More information for shareholders Internet More information on BHP Billiton or BHP Billiton’s offer for Rio Tinto can be found at either of the following web pages: BHP Billiton: www.bhpbilliton.com BHP Billiton’s offer for Rio Tinto: www.bhpbilliton.com\RioTintoOffer Or Email: investor.relations@bh
Slide 27: cdl
cdl bhpbilliton sourcing the future