BHP Billiton launches $147 billion Rio Tinto bid

SYDNEY (Reuters) - BHP Billiton Ltd/Plc (BHP.AX) (BLT.L), the world's No.1 miner, formally launched a $147.4 billion takeover bid on Wednesday for rival Rio Tinto Ltd/Plc (RIO.AX)(RIO.L).

BHP sweetened its initial three-for-one approach, offering 3.4 of its shares for every Rio share, in what would be the world's second-largest takeover bid.

BHP, which also announced its first-half profit fell 2.4 percent to $6.017 billion, said its offer had a minimum acceptance condition of 50 percent of Rio Tinto shares.

BHP's chief executive Marius Kloppers told a briefing he had had no talks with the Rio board, but believed the offer had widespread support.

"We think this offer is compelling," Kloppers said.

Rio Tinto had opposed BHP's approach, arguing it could grow more effectively as an independent company, while major steel making customers in China and Japan have raised concerns about the potential dominance of a merged group.

"The offer should be enough to get BHP talking to Rio," said Rob Patterson, managing director of fund manager Argo Investments. "We think to raise the offer to that degree probably makes sense."

BHP's task was made more complicated last week when Aluminum Corp of China (Chinalco) teamed with Alcoa Inc (AA.N) to buy 12 percent of Rio in a share raid in London.

BHP said Rio shareholders would hold 44 percent of the merged entity, compared with 36 percent in the initial approach made last November.

The company earlier said it faced significantly higher input costs and unfavorable foreign exchange movements during the first half, although underlying earnings before interest and tax rose 5.4 percent to $9.6 billion.

The group posted record half-year results in its iron ore, petroleum and manganese businesses.

BHP also lifted its interim dividend to 29 cents a share, up 45 percent year-on-year.

($1=A$1.12)

(Reporting by James Regan)