( AFP )- The world's largest miner BHP Billiton is under increasing pressure to sweeten its three-for-one share offer for Rio Tinto , a report said Wednesday.
Rio's advisors Macquarie Bank have suggested BHP could afford to increase its proposal to as much as five-for-one given the benefits of creating a mining "super major", The Australian newspaper said.
The Australian, citing analysis drawn up by Macquarie Bank and seen by the newspaper, said BHP could afford to raise its offer to 4.25 BHP shares for every Rio share based on Rio's 2008 forecast earnings, declared merger synergies and a planned share buyback.
The offer increases to 5.02 for one if a 10 percent upward share market re-rating is assumed, after creation of a super major.
The analysis is the first public hint of where Rio believes the "ballpark" may be in terms of negotiating a merger with BHP, the newspaper said.
The BHP board was expected to meet as early as Wednesday to decide whether to make a formal offer for Rio by the February 6 deadline set by the UK Takeover Panel or to walk away from the deal for six months.
Rio has previously dismissed BHP's offer as too cheap, with chief executive Tom Albanese saying it was "several ballparks away" from being realistic.
The offer would value Rio Tinto , the world's third-biggest miner, at about 110 billion US dollars.