BHP Billiton admitted yesterday that some of its shareholders feared that they could lose money as a result of the miner’s proposed £62 billion takeover of Rio Tinto.

BHP, the world’s largest mining company, has put forward a three-for-one share offer to take control of Rio, a deal that would give Rio investors 41 per cent of the enlarged group.

This represents a 28 per cent gain for Rio’s shareholders based on the share prices of the two companies at the end of October.

Some BHP shareholders are concerned that this premium could erode the value of their own investments.

This specifically affects the one third of BHP shareholders who do not hold Rio stock, as their investments will reduce in value to pay the premium to Rio shareholders.

The issue was raised at BHP’s annual meeting in Adelaide, Australia, yesterday.

Dean Kemp, a small investor from Adelaide, said: “I’m not too sure taking over Rio Tinto is a good idea, particularly if it drives someone like China to use government money to take 20, 40, 50 per cent or more of the new company to maintain control over commodities prices. Then what happens to our shares?”

Marius Kloppers, BHP’s chief executive, responded to the concerns saying: “I think it’s fair to say that different people have different views.”

Mr Kloppers again called for the board of Rio Tinto to sit down with his company to discuss the offer, which would create a mining giant with a market capitalisation of more than £150 billion.

However, he gave no indication that BHP would be willing to make a hostile bid if Rio continued to rebuff its offer.

Mr Kloppers emphasised that he was being “patient” and was willing to wait for Rio shareholders to raise the proposed deal with the company’s management in the hope of forcing them to sit down at the negotiating table.

He said: “We continue to seek support from the discussions between us and Rio Tinto. We look forward to talking to them about combining these two groups in a way that both sets of shareholders can benefit.”

BHP also insisted that its proposed merger would not be bad for customers. A merged BHP-Rio would control 36 per cent of the world’s iron ore, much of which is exported to China to feed its booming economy.

There have been rumours that the Chinese Government could take a blocking stake in Rio or invest in the enlarged company to exert influence over commodity prices.

Mr Kloppers, explaining how customers would benefit from the deal, said: “More volume, more quickly. We can combine the two sets of resources, the two sets of infrastructure – and one of our core value propositions is that the combined entity will be able to produce more product more quickly.” Despite these assurances, BHP’s customers continue to be worried about the proposed merger. German steelmakers have called for the European Union to block the merger and Chinese, Japanese and South Korean steelmakers have also expressed their concern.

On Monday, Rio set out its defence against the BHP bid, highlighting growth opportunities that it believes gives it a strong future as an independent company.

Most large shareholders appear to be following Mr Kloppers’s lead and are being patient with this deal, waiting to talk to Rio about its future. They are also holding out for BHP to raise its offer, which most analysts think is inevitable.

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