Mining monolith talk eases but merger still has merit

<p>Rio Tinto shares had returned to normal during trading this morning (Friday, May 11) after intense speculation about a possible deal with BHP Billiton proved to be premature.</p> <p>Rio shares were trading at $90.21, after reaching a high of $99.69 on Tuesday amid a flurry of market activity in response to open-ended comments by a BHP Billiton executive about future synergies. </p> <p>BHP shares had also responded favourably to the buying frenzy, but lost ground to $30.89 this morning.</p> <p>A united BHP and Rio would have a significant effect on particularly the iron ore market, and give the combined company up to $1.2bn of cost savings.</p> <p>Analysts suggest that, while BHP seemed unlikely to launch an immediate bid, a deal between the two mining giants could not be ruled out.</p> <p>A friendly deal is considered more likely as it would save both companies unnecessary costs associated with a hostile bid.</p> <p>Goldman Sachs JBWere told the <em>Sydney Morning Herald</em> that BHP had considered a merger with Rio, but the discussions remained behind closed doors.</p> <br />