Shares in Rio Tinto fell in early trade this morning after the mining giant announced that it had rejected the final takeover approach from rival BHP Billiton, a decision that had been predicted by analysts.
Rio Tinto was underwhelmed by the hostile $164.35 billion all scrip takeover offer overnight, sticking to its original story that the bid continued to undervalue the company.
Rio's shares dropped $1.84, or 1.45% to $125.30 by 1006 AEDT, while BHP Billiton lost 10 cents to $36.56.
"BHP Billiton's offers, while improved, still fail to recognise the underlying value of Rio Tinto's quality assets and prospects," said Rio Tinto chairman Paul Skinner.
"Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto."
BHP Billiton has been courting Rio for months with its informal three-for-one share offer, but yesterday revealed the formal takeover offer of 3.4 shares for every Rio Tinto share.
This formal offer was up 13% from the previous preliminary offer and came hours ahead of a deadline by UK regulators to either "put up or shut up".
"Rio has always touted that they are worth more and their independent advisors have been saying that BHP can afford up to 4.25-to-one," DJ Carmichael analyst James Wilson told AAP.
Mr Skinner said the company's plans were unchanged and would remain so unless a proposal is made "that fully reflects the value of Rio Tinto".
If successful, the takeover would be the largest in mining history and the second largest in global corporate history.
Shares in BHP closed up by 26 cents at $36.92 while Rio fell slightly, losing 14 cents to close down at $127.00.
