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BHP Hunts For New Takeover Opportunities

Mining giant said it was looking for other takeover targets after abandoning its $68 billion hostile bid for Rio Tinto citing risky conditions.

SYDNEY, Australia (AP) -- Mining giant BHP Billiton Ltd. said it was looking for other takeover targets during the current global financial turmoil, after abandoning its $68 billion hostile bid for Rio Tinto citing risky conditions.

Rio Tinto, meanwhile, defended its balance sheet Wednesday after conceding that its purchase of Canadian aluminum producer Alcan Inc. last year had lumbered it with a large debt burden. BHP Billiton cited Rio Tinto's debt as one reason for walking away from the mammoth takeover bid.

Rio Tinto's share price plunged more than 35 percent within minutes of markets opening in Australia on Wednesday, to Australian dollars 40.94, following similar losses on the London bourse Tuesday. BHP Billiton shares surged almost 8 percent, to AU$28.27.

BHP Billiton, the world's biggest mining company, said it was shutting down the takeover bid because of plummeting commodity prices, disarray in financial markets and the difficulty of selling of Rio Tinot's assets under the current conditions.

Chief executive Marius Kloppers declined to comment on whether BHP Billiton would make another tilt at Rio Tinto when conditions improved, but said the company would be on the lookout for other targets.

"There will no doubt be some players in this industry that won't come out of this unscathed and we would have to continue to look at those opportunities," he told reporters late Tuesday on a conference call.

The Melbourne-headquartered company was offering 3.4 BHP shares for every share of Rio Tinto in a deal that was valued in February at about $147 billion -- one of the world's biggest takeover offers. But the stock prices of the two companies have plummeted since then along with global markets, and the bid's value shrank to around $68 billion.

Rio Tinto consistently opposed BHP Billiton's bid, saying it undervalued the company.

London-based Rio Tinto's chairman Paul Skinner said Wednesday that the company would remain focused on its business, and declined to comment on a possible future bid by BHP Billiton.

"We didn't start this process, we didn't end this process, I can't predict what they may or may not do," Skinner told reporters. "The priority for Rio Tinto right now is to close a chapter and get on with our lives and just continue our pursuit of shareholder value."

Rio Tinto has about $40 billion of debt associated with its purchase of Canadian aluminum producer Alcan Inc. last year, which Skinner conceded was now dragging on the company. BHP Billiton has $6.3 billion in debt.

"We always look for opportunities to buy and we are, I would admit, somewhat constrained in our ability to do so because of the debt we are carrying with Alcan Inc.," he said. "But that's not a debt we regret -- we knew exactly what we were doing when we did."

BHP Billiton said the European Commission was unlikely to grant antitrust approval to the Rio Tinto takeover unless some Rio Tinto assets were sold, but that the current market conditions made that untenable and BHP would not agree to such conditions.

Even if the European Commission, which was due to decide on the deal by Dec. 1, approves it without sell-off conditions, BHP Billiton's board would still recommend that shareholders reject the bid.

BHP said it would write off Australian dollars 450 million ($285 million) in costs connected to the bid.

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